U.S. Stocks May Regain Ground Following Yesterday’s Sell-Off

Following the sell-off seen late in the previous session, stocks may regain some ground in early trading on Thursday. The major index futures are currently pointing to a notably higher open for the markets, with the S&P 500 futures up by 0.8 percent.

Bargain hunting may contribute to early strength on Wall Street, as some traders look to pick up stocks at reduced levels following yesterday’s steep losses.

The Dow closed lower for the tenth straight session on Wednesday, marking its longest losing streak since 1974

The blue chip index tumbled to its lowest closing level in over a month, while the broader S&P 500 also slumped to a one-month closing low.

Yesterday’s sell-off on Wall Street came after the Federal Reserve announced its widely expected decision to lower interest rates by a quarter point but forecast fewer than previously estimated rate cuts next year.

While strength in the U.S. economy played a factory in the Fed taking a cautious approach to further rate cuts, the futures remained firmly positive following the release of a batch of largely upbeat economic data.

The Commerce Department released a report this morning showing the pace of U.S. economic growth unexpectedly surged by more than previously estimated in the third quarter.

The report said gross domestic product shot up by 3.1 percent in the third quarter, reflecting an upward revision from the 2.8 percent jump previously reported. Economists had expected the pace of growth to be unrevised.

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits pulled back by more than expected in the week ended December 14th.

The Labor Department said initial jobless claims fell to 220,000, a decrease of 22,000 from the previous week’s unrevised level of 242,000. Economists had expected jobless claims to dip to 230,000.

Shortly after the start of trading, the National Association of Realtors is scheduled to release its report on existing home sales in the month of November. Existing home sales are expected to jump to an annual rate of 4.07 million in November after surging to a rate of 3.96 million in October.

The Conference Board is also due to release its report on leading economic indicators in the month of November. The leading economic index is expected to edge down by 0.1 percent in November after falling by 0.4 percent in October.

Stocks saw modest strength early in the session on Wednesday but plummeted in reaction to the Federal Reserve’s monetary policy announcement. The major averages all moved sharply lower on the day, with the Dow extending its losing streak to ten straight sessions.

The major averages finished the day near their lows of the session. The Dow plummeted 1,123.03 points or 2.6 percent to 42,326.87, the Nasdaq dove 716.37 points or 3.6 percent to 19,392.69 and the S&P 500 plunged 178.45 points or 3.0 percent to 5,872.16.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index slid by 0.7 percent, while China’s Shanghai Composite Index fell by 0.4 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index is down by 0.9 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both down by 1.0 percent.

In commodities trading, crude oil futures are edging down $0.02 to $70.56 a barrel after rising $0.50 to $70.58 a barrel on Wednesday. Meanwhile, after slipping $8.70 to $2,675.50 an ounce in the previous session, gold futures are tumbling $41.40 to $2,611.90 an ounce.

On the currency front, the U.S. dollar is trading at 156.77 yen versus the 154.80 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0408 compared to yesterday’s $1.0353.