U.S. Stocks Turning In Lackluster Performance Ahead Of Powell Remarks

With traders awaiting remarks by Federal Reserve Chair Jerome Powell, stocks are turning in a lackluster performance during trading on Thursday. The choppy trading comes on the heels of the steep drop seen in the previous session.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 3.22 points or less than a tenth of a percent at 13,317.52, the S&P 500 is down 10.03 points or 0.2 percent at 4,304.57 and the Dow is down 136.35 points or 0.4 percent at 33,528.73.

Traders seem reluctant to make significant moves ahead of Powell’s comments later this afternoon, which could impact the outlook for interest rates.

Powell is scheduled to participate in a discussion on the economic outlook before an Economic Club of New York luncheon.

Treasury yields are seeing further upside ahead of Powell’s remarks, with the yield on the benchmark ten-year note climbing to a new sixteen-year high.

“If Powell acknowledges that the bond market is doing some of their work and that they will likely keep rates steady next month, that could provide some relief for the multi-decade highs we are seeing with Treasury yields,” said Edward Moya, senior market analyst at OANDA.

He continued, “If Powell does not provide any hints that the policy is most likely restrictive enough, it could get very ugly. If Treasury yields surge above 5%, this could send stocks back to monthly lows.”

The increase in treasury yields comes after the Labor Department released a report showing initial jobless claims unexpectedly declined to a nearly nine-month low in the week ended October 14th.

The report said initial jobless claims fell to 198,000, a decrease of 13,000 from the previous week’s revised level of 211,000.

Economists had expected jobless claims to inch up to 212,000 from the 209,000 originally reported for the previous week.

With the unexpected dip, jobless claims dropped to their lowest level since hitting 194,000 in the week ended January 21st.

Sector News

Pharmaceutical stocks have shown a substantial move to the downside on the day, dragging the NYSE Arca Pharmaceutical Index down by 2.6 percent.

Considerable weakness is also visible among biotechnology stocks, as reflected by the 1.5 percent drop by the NYSE Arca Biotechnology Index.

Healthcare, oil service and gold stocks are also seeing notable weakness, while airline and retail stocks have shown strong moves to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index tumbled by 1.9 percent, while Hong Kong’s Hang Seng Index plunged by 2.5 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index has slumped by 1.2 percent, the French CAC 40 Index is down by 0.7 percent and the German DAX Index is down by 0.3 percent.

In the bond market, treasuries are extending the downward trend seen over the past several sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.3 basis points at 4.947 percent.