Interest Rate Uncertainty May Lead To Choppy Trading On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Thursday, with stocks likely to extend the lackluster performance seen in the previous session.

Traders may be reluctant to make significant moves as they digest the latest U.S. economic data and look ahead to a speech by Federal Reserve Chair Jerome Powell later this afternoon.

The Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits unexpectedly edged lower in the week ended November 9th.

The report said initial jobless claims slipped to 217,000, a decrease of 4,000 from the previous week’s unrevised level of 221,000. Economists had expected jobless claims to inch up to 223,000.

The unexpected decline pulled jobless claims down to their lowest level since hitting 216,000 in the week ended May 18th.

After yesterday’s consumer price inflation data matched expectations, the Labor Department also released a separate report showing producer prices in the U.S. also increased in line with economist estimates in the month of October.

The Labor Department said its producer price index for final demand rose by 0.2 percent in October following a revised 0.1 percent uptick in September.

Economists had expected producer prices to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.

Meanwhile, the report said the annual rate of growth by producer prices accelerated to 2.4 percent in October from an upwardly revised 1.9 percent in September.

The annual rate of producer price growth was expected to accelerate to 2.3 percent from the 1.8 percent originally reported for the previous month.

The slightly faster than expected annual price growth combined with the jobless claims data showing continued strength in the labor market may add to recent uncertainty about the outlook for interest rates.

While the Fed is still widely expected to lower interest rates by a quarter point next month, there is some concern sticky inflation will lead the central bank to slow the pace of its rate cuts in early 2025.

Stocks showed a lack of direction over the course of the trading day on Wednesday, with the major averages bouncing back and forth across the unchanged line following the pullback seen during Tuesday’s session.

The major averages eventually ended the day narrowly mixed. While the tech-heavy Nasdaq dipped 50.66 points or 0.3 percent to 19,230.74, the S&P 500 crept up 1.39 points or less than a tenth of a percent to 5,985.38 and the Dow inched up 47.21 points or 0.1 percent to 43,958.19.

The choppy trading on Wall Street came following the release of closely watched consumer price inflation data that came in line with economist estimates.

The Labor Department said its consumer price index crept up by 0.2 percent in October, matching the upticks seen in each of the three previous months as well as expectations.

The report also said the annual rate of consumer price growth accelerated to 2.6 percent in October from 2.4 percent in September. The faster growth also came in line with economist estimates.

Excluding food and energy prices, core consumer prices climbed by 0.3 percent in October, matching the increases seen in each of the two previous months along with expectations.

The annual rate of core consumer price growth was unchanged from the previous month at 3.3 percent, which was also in line with estimates.

While the data increased confidence the Federal Reserve will continue lowering interest rates next month, inflation remaining somewhat sticky led to uncertainty about the likelihood of future rate cuts.

“The 2.6% year-over-year print, while expected, may keep the Fed mindful from declaring victory over its campaign to quell inflation,” said Quincy Krosby, Chief Global Strategist for LPL Financial.

Airline stocks saw substantial weakness on the day, with the NYSE Arca Airline Index plummeting by 7.3 percent. The index continued to give back ground after reaching its best closing level in over a year on Monday.

A nosedive by shares of Spirit Airlines (SAVE) weigh on the sector, with the discount airline plunging by 59.3 percent after a report from the Wall Street Journal said Spirit is preparing to file for bankruptcy protection after merger talks with Frontier Airlines (ULCC) broke down.

Significant weakness was also visible among semiconductor stocks, as reflected by the 2.0 percent slump by the Philadelphia Semiconductor Index.

Oil service, steel and computer hardware stocks also saw considerable weakness, while oil producer and retail stocks showed strong moves to the upside.

Commodity, Currency Markets

Crude oil futures are climbing $0.68 to $69.11 a barrel after rising $0.31 to $68.43 a barrel on Wednesday. Meanwhile, after tumbling $19.80 to $2,586.50 an ounce in the previous session, gold futures are plunging $29.30 to $2,557.20 an ounce.

On the currency front, the U.S. dollar is trading at 156.09 yen versus the 155.46 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0525 compared to yesterday’s $1.0564.

Asia

Asian stocks turned in a mixed performance on Thursday, with Chinese and Hong Kong markets tumbling on worries of a possible trade war between China and the United States in the wake of Donald Trump’s return to the White House.

Longer-dated U.S. bond yields rose alongside the dollar, while gold hit an eight-week low after some Federal Reserve officials shifted their attention back to inflation risks.

It is feared that Trump’s plan for lower taxes and higher tariffs will stoke inflation, resulting in larger U.S. deficits and reducing the Fed’s scope to ease interest rates during 2025 and beyond.

Oil prices were lower in Asian trading amid concerns about rising global output and slow demand growth.

China’s Shanghai Composite Index slumped 1.7 percent 30 3,379.84 as growth worries persisted despite the recent stimulus package.

Hong Kong’s Hang Seng Index dove 2.0 percent to 19,435.81 despite Beijing unveiling tax incentives on home and land transactions on Wednesday to shore up an ailing economy.

Tech giant Tencent edged marginally lower after its third quarter revenue missed expectations. Peer JD.com plunged 4.7 percent and Alibaba gave up 2.9 percent.

Japanese markets ended lower in choppy trading despite repeated verbal warnings by government officials about the abrupt decline of the yen, which hit a four-month low against the dollar.

The Nikkei 225 Index fell 0.5 percent to 38,535.70, while the broader Topix Index settled 0.3 percent lower at 2,701.22.

Seoul stocks fluctuated before finishing on a flat note. The Kospi finished marginally higher at 2,418.86. Shares of Samsung Electronics fell 1.4 percent to extend losses after falling to an over four-year low of under 51000 won ($36.24) Wednesday amid worries about the impact of U.S. tariffs under a new Trump administration.

Australian markets eked out modest gains after data showed the unemployment rate held steady at 4.1 percent last month but hiring gains slowed.

The benchmark S&P/ASX 200 Index rose 0.4 percent to 8,224, led by banks as RBA Governor Michele Bullock indicated rate cuts are off the table until inflation aligns with the target.

Technology stocks also advanced, with Xero surging 5.9 percent after reporting robust quarterly results. The broader All Ordinaries Index closed 0.3 percent higher at 8,479.90.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index closed up 0.2 percent at 12,692.94.

Europe

European stocks have moved mostly higher on Thursday, with underlying sentiment supported by positive corporate and earnings news.

On a busy day of on the economic calendar, data from Eurostat showed the euro area economy expanded at a faster pace in the third quarter, as initially estimated.

Gross domestic product grew 0.4 percent sequentially after rising 0.2 percent in the second quarter. The rate came in line with the preliminary flash estimate published on October 30.

Meanwhile, a separate Eurostat report said Eurozone industrial production declined in September on decreases in energy and capital goods output.

Industrial output fell 2.0 percent month-on-month in September, in contrast to the 1.5 percent increase in August. The decline was also bigger than forecasts for a 1.3 percent drop.

The German DAX Index is up by 1.6 percent, the French CAC 40 Index is up by 1.2 percent and the U.K.’s FTSE 100 Index is up by 0.5 percent.

Monte dei Paschi di Siena has soared after the Italian government sold a 15 percent stake in the bank to rival Banco BPM. Shares of the latter have also surged.

Dutch chip equipment maker ASML has also rallied after saying it expects sales to grow by 8 percent to 14 percent over the coming five years.

Burberry shares have also spiked in London after the new CEO of the fashion brand, Joshua Schulman, pledged to “stabilize the business” with a turnaround plan.

Insurer Aviva has also moved sharply higher a strong third quarter update, showing continued growth across various business lines.

Premier Foods has also jumped after reporting higher first-half revenues and profits as consumers switched back to brands.

Alstom has also surged. The French train maker beat expectations for its half-year cash position, helped by increased volumes and cost saving initiatives.

SCOR SE has also spiked. The reinsurer reported a group net loss in the third quarter, but its P&C segment saw a very strong performance, with a combined ratio of 88.3 percent.

Deutsche Telekom has also jumped after the German telecom group beat third-quarter profit expectations and raised its full-year core profit guidance.

Engineering group Siemens has also shown a substantial move to the upside after its fiscal fourth quarter earnings topped expectations.

U.S. Economic News

First-time claims for U.S. unemployment benefits unexpectedly edged lower in the week ended November 9th, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims slipped to 217,000, a decrease of 4,000 from the previous week’s unrevised level of 221,000. Economists had expected jobless claims to inch up to 223,000.

The unexpected decline pulled jobless claims down to their lowest level since hitting 216,000 in the week ended May 18th.

The Labor Department said the less volatile four-week moving average also dipped to 221,000, a decrease of 6,250 from the previous week’s unrevised average of 227,250.

After yesterday’s consumer price inflation data matched expectations, the Labor Department released a separate report on Thursday showing producer prices in the U.S. also increased in line with economist estimates in the month of October.

The Labor Department said its producer price index for final demand rose by 0.2 percent in October following a revised 0.1 percent uptick in September.

Economists had expected producer prices to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.

Meanwhile, the report said the annual rate of growth by producer prices accelerated to 2.4 percent in October from an upwardly revised 1.9 percent in September.

The annual rate of producer price growth was expected to accelerate to 2.3 percent from the 1.8 percent originally reported for the previous month.

At 9 am ET, Richmond Federal Reserve President Thomas Barkin is scheduled to speak on the economy in a fireside chat before the Real Estate Roundtable.

The Energy Information Administration is due to release its report on oil inventories in the week ended November 8th at 11 am ET. Crude oil inventories are expected to rise by 1.0 million barrels after climbing by 2.1 million barrels in the previous week.

Also at 11 am ET, the Treasury Department is scheduled to announce the details of this month’s auction of twenty-year bonds.

Federal Reserve Chair Jerome Powell is due to speak on the economic outlook before an event hosted by the Dallas Regional Chamber, World Affairs Council of DFW and the Federal Reserve Bank of Dallas at 3 pm ET.

At 4:45 pm ET, New York Federal Reserve President John Williams is scheduled to speak before an “Intermediating Impact: Making Missing Markets” event.