U.S. Stocks Move Moderately Lower Amid Renewed Monetary Policy Concerns

Stocks have moved moderately lower in morning trading on Thursday, extending the downward move seen over the two previous sessions. The major averages have all moved to the downside, although selling pressure has remained somewhat subdued.

Currently, the major averages are off their worst levels but still in the red. The Dow is down 192.63 points or 0.6 percent at 32,227.43, the Nasdaq is down 66.30 points or 0.5 percent at 12,895.59 and the S&P 500 is down 16.15 points or 0.4 percent at 3,872.99.

The continued weakness on Wall Street partly reflects renewed concerns about the outlook for monetary policy following comments from Federal Reserve Chair Jerome Powell.

In an interview on National Public Radio’s “Morning Edition,” Powell noted accelerated coronavirus vaccine distribution combined with support from Congress will enable the U.S. to reopen the economy sooner than might have been expected.

Powell also said the Fed plans to gradually roll back its asset purchases as the economy makes substantial progress towards the Fed’s goals of maximum employment and price stability.

While Powell stressed the pullback in support will only come when the “economy has all but fully recovered,” the comments still seem to have spooked investors.

The Fed’s ultra-easy monetary policy helped prop up the markets throughout the coronavirus pandemic, with the major averages soaring to record highs despite the turmoil in the economy.

Potentially adding to the concerns about monetary policy, the Labor Department released a report showing initial jobless claims fell to their lowest level since the early days of the pandemic.

The report said initial jobless claims slid to 684,000 in the week ended March 20th, a decrease of 97,000 from the previous week’s revised level of 781,000.

Economists had expected jobless claims to decline to 730,000 from the 770,000 originally reported for the previous week.

With the much bigger than expected decrease, jobless claims dropped to their lowest level since hitting 282,000 in the week ended March 14, 2020.

A separate report from the Commerce Department showed economic activity in the U.S. unexpectedly grew faster than previously estimated in the fourth quarter of 2020.

The report showed real gross domestic product surged up by 4.3 percent in the fourth quarter compared to the previously reported 4.1 percent jump. Economists had expected the pace of GDP growth to be unrevised.

Most of the major sectors are showing only modest moves on the day, although energy stocks are seeing considerable weakness amid a steep drop by the price of crude oil.

Crude for May delivery is tumbling $2.08 to $59.10 a barrel after soaring $3.42 to $61.18 a barrel in the previous session.

Reflecting the weakness in the energy sector, the NYSE Arca Oil Index and the Philadelphia Oil Service Index are both down by 2.4 percent.

Gold stocks have also moved lower despite an increase by the price of the precious metal, while steel, commercial real estate and software stocks are also seeing some weakness on the day.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index jumped by 1.1 percent, while China’s Shanghai Composite Index slipped by 0.1 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.’s FTSE 100 Index has slumped by 1 percent, the German DAX Index and the French CAC 40 Index are down by 0.6 percent and 0.5 percent, respectively.

In the bond market, treasuries are little changed after moving modestly higher earlier in the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 1.610 percent.