Stocks may show a lack of direction in early trading on Thursday as traders continue to digest yesterday's announcement from the Federal Reserve. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures up by just 10 points.
The markets may experience an extension of the choppy trading that was seen following the Fed's latest monetary policy announcement on Wednesday.
As was widely expected, the Fed announced an extension of its "Operation Twist" program until the end of the year. The program had previously been due to expire this month.
"Operation Twist" involves replacing short-term securities in the Fed's bond portfolio with longer-term securities in an effort to push already low long-term interest rates even lower.
At the same time, the Fed generated some negative sentiment by lowering its GDP forecasts, although Fed Chairman Ben Bernanke noted that the central bank is prepared to take additional steps to prop up the sluggish economy.
Traders are also digesting the Labor Department's recently released report on initial jobless claims in the week ended June 16th.
The report showed that jobless claims edged down to 387,000 from the previous week's revised figure of 389,000. Economists had expected claims to dip to 383,000 from the 386,000 originally reported for the previous week.
Additionally, a slew of data is scheduled to be released a half-hour after the start of trading, with traders likely to keep an eye on reports on existing home sales, leading economic indicators, and Philadelphia-area manufacturing activity.
Stocks saw considerable volatility over the course of the trading day on Wednesday as traders digested the news from the Fed. Nonetheless, the markets largely held on to their recent gains.
The major averages bounced back and forth across the unchanged line before ending the session mixed. While the Nasdaq crept up 0.69 points or less than a tenth of a percent to 2,930.45, the Dow edged down 12.94 points or 0.1 percent to 12,824.39 and the S&P 500 slipped 2.29 points or 0.2 percent to 1,355.69.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday, although Japan's Nikkei 225 Index bucked the downtrend and rose by 0.8 percent. Hong Kong's Hang Seng Index and China's Shanghai Composite Index fell by 1.3 percent and 1.4 percent, respectively.
Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index is down by 0.3 percent, the German DAX Index and the French CAC 40 Index are up by 0.3 percent and 0.4 percent, respectively.
In commodities trading, crude oil futures for August delivery are sliding $0.77 to $80.82 a barrel in their first day of trading as the front month contract. Gold futures, which fell $7.40 to $1,615.80 an ounce in the previous session, are tumbling $24.70 to $1,591.10 an ounce.
Among currencies, the U.S. dollar is trading at 80.08 yen compared to the 79.54 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2671 compared to yesterday's $1.2707.
by RTT Staff Writer
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