Selling pressure remains strong as investors wait for words of wisdom (and hope) from Federal Reserve chair Janet Yellen.
Yellen is due to speak later on today in the University of Massachusetts on inflation dynamics and monetary policy, and it won’t just be the university’s students paying careful attention.
“If she continues to talk up the threat of emerging markets and the existence of deflationary pressures, we could see markets continue to push back rate hike expectations into next year,” suggests Craig Erlam, an analyst at foreign exchange trading firm OANDA.
“Already the markets are pricing in only around a 35% chance that rates will rise this year; if she still intends to hike and not cause too much market turmoil, she needs to start sending a clear message,” Erlam opined.
The S&P 500 has opened around 15 points lower, as expected, at 1,924, but the fall on the Dow was much heavier than anticipated – down 222 points at 16,058. The Nasdaq Composite’s 0.8% fall was on a par with the S&P’s; the index was off 37 at 4,717.
All 30 members of the Dow Jones are in the red, none more so than industrial and agricultural machinery maker Caterpillar (NYSE:CAT),
Shares fell 6.7% to US$65.50, after touching $64.65, the lowest intraday price since July 2010.
The Peoria, Illinois-based company said in a statement on Thursday that it expected revenue to fall for the third straight year in 2015, to $48bn.
Revenue is expected to fall a further 5% in 2016, it added.
Broker Axiom has initiated coverage on Caterpillar with a ‘sell’ rating and a US$28 price target, which is well below the current level of US$65.31, even after this morning’s US$4.80 fall.
Fellow Dow constituent Boeing (NYSE:BA) loses altitude, falling to US$127.56 from US$131.67 overnight, despite winning orders and commitments from China for 250 narrow-body 737 aircraft and 50 wide-body aircraft, valued at about US$38bn at list prices.
The aerospace giant also agreed to set up a 737 jet completion and delivery center in China, and the market's concern is that this will not go down well with Boeing's US-based workers.
There’s better news from the pharmaceutical sector, where Conatus Pharmaceuticals (NASDAQ:CNAT) added to yesterday’s gains, rising just over a dollar to US$6.80.
The company said on Wednesday that its Emricasan drug met primary end-points in a phase II trial on patients suffering with liver cirrhosis.
Arrowhead Research (NASDAQ:ARWR) was also on a roll, surging more than 19% to US$8.08 on the back of upbeat news on its hepatitis B drug ARC-520.
The Heparc-2001 Phase 2a clinical study of ARC-520 indicated the drug achieves significant HBV s-Antigen reductions in humans.
Book publisher Scholastic (NASDAQ:SCHL) eased 73 cents to US$41.98, despite marginally beating expectations with earnings for the three months to the end of August.