U.S. Stocks Fluctuating Following Recent Pullback

Following the sharp pullback seen over the two previous sessions, stocks have fluctuated over the course of morning trading on Thursday. The major averages recovered from an initial drop but have moved back to the downside since then.

The major averages have regained ground in recent trading but currently remain in negative territory. The Dow is down 143.96 points or 0.4 percent at 34,816.73, the Nasdaq is down 14.91 points or 0.1 percent at 14,511.01 and the S&P 500 is down 5.03 points or 0.1 percent at 4,395.24.

The choppy trading on Wall Street comes as traders express some uncertainty about the near-term outlook for the markets after the initial weakness dragged the major averages down to their lowest intraday levels in almost a month.

The initial move to the downside came as traders continued to digest the minutes of the Federal Reserve’s latest monetary policy meeting.

The minutes indicated that most Fed officials currently expect economic conditions to warrant scaling back the central bank’s asset purchase program before the end of the year.

The Fed restarted its asset purchase program back in March of 2020 and is currently purchasing bonds at a pace of $120 billion per month.

The asset purchase program has helped to prop up the markets throughout much of the coronavirus pandemic, with stocks reaching record highs even as the economy struggled.

However, the minutes showed there was still some disagreement about the timing of tapering the asset purchases, leading to some uncertainty on Wall Street.

Potentially adding evidence to Fed officials’ view that the economy is close to the goal of maximum employment, the Labor Department released a report this morning showing initial jobless claims fell to a new pandemic-era low in the week ended August 14th.

The Labor Department said initial jobless claims fell to 348,000, a decrease of 29,000 from the previous week’s revised level or 377,000.

Economists had expected jobless claims to edge down to 363,000 from the 375,000 originally reported for the previous week.

Initial jobless claims decreased for the fourth consecutive week, falling to their lowest level since hitting 256,000 in the week ended March 14, 2020.

Despite the volatility by the broader markets, steel stocks are extending a recent sell-off in morning trading, with the NYSE Arca Steel Index plunging by 4.6 percent to its lowest intraday level in almost a month.

Substantial weakness is also visible among energy stocks, which are moving sharply lower along with the price of crude oil. Crude for September delivery is plummeting $2.72 to $62.74 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 4.5 percent, the NYSE Arca Oil Index is down by 3.7 and the NYSE Arca Natural Gas Index is down by 2.3 percent.

Airline stocks are also seeing significant weakness in morning trading, resulting in a 3.1 percent nosedive by the NYSE Arca Airline Index.

Computer hardware, brokerage and gold stocks have also moved notably lower, extending the downward trends seen in the recent sessions.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index slumped by 1.1 percent, while Hong Kong’s Hang Seng Index plunged by 2.1 percent.

The major European markets have also shown significant moves to the downside on the day. While the French CAC 40 Index has plummeted by 2.3 percent, the U.K.’s FTSE 100 Index is down by 1.8 percent and the German DAX Index is down by 1.6 percent.

In the bond market, treasuries remain firmly positive after an initial advance. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.1 basis points at 1.242 percent.