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U.S. Stocks Seeing Substantial Volatility Amid Focus On Bond Yields

wallstreet aug24 04mar21 lt

With traders closely watching activity in the bond markets, stocks have shown a lack of direction over the course of morning trading on Thursday. The major averages have spent the morning bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest gains. The Dow is up 42.09 points or 0.1 percent at 31,312.18, the Nasdaq is up 7.38 points or 0.1 percent at 13,005.13 and the S&P 500 is up 5.20 points or 0.1 percent at 3,824.92.

Stocks initially moved to the downside amid an uptick in bond yields, with the Nasdaq plunging by 1.7 percent to its lowest intraday level in almost two months.

The subsequent rebound by the major averages came as the yields on ten-year notes and thirty-year bonds pulled back near the unchanged line.

Traders have kept a close eye on activity in the bond markets in recent sessions, as a recent spike in yields has raised concerns about inflation and the outlook for interest rates.

Later in the day, Federal Reserve Chair Jerome Powell is due to have a conversation on the U.S. economy at The Wall Street Journal Jobs Summit.

Traders are likely to pay close attention to Powell's remarks, looking for any comments about the recent increase in yields and the outlook for monetary policy.

Powell has repeatedly sought to assure investors that the Fed intends to maintain ultra-easy monetary policy for the foreseeable future as the economy recovers from the coronavirus pandemic.

On the economic front, the Labor Department released a report showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended February 27th.

The report said initial jobless claims inched up to 745,000, an increase of 9,000 from the previous week's revised level of 736,000.

Economists had expected jobless claims to rise to 750,000 from the 730,000 originally reported for the previous week.

A separate report released by the Commerce Department showed a bigger than expected increase in new orders for U.S. manufactured goods in the month of January.

Airline stocks have shown a substantial move to the downside on the day, resulting in a 3.6 percent nosedive by the NYSE Arca Airline Index.

Considerable weakness is also visible among computer hardware socks, as reflected by the 2.9 percent slump by the NYSE Arca Computer Hardware Index.

On the other hand, oil stocks have moved sharply higher in morning, driving the NYSE Arca Oil Index up by 2.6 percent to its best intraday level in a year.

The rally by oil stocks comes amid a significant increase by the price of crude oil, with crude for April delivery spiking $1.93 to $63.21 a barrel.

Natural gas, gold and utilities stocks are also seeing notable strength, offsetting the weakness seen in the aforementioned sectors.

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Thursday. Japan's Nikkei 225 Index and China's Shanghai Composite Index both tumbled by 2.1 percent.

The major European markets have shown more modest moves to the downside on the day. While the U.K.'s FTSE 100 Index is down by 0.6 percent, the German DAX Index is down by 0.3 percent and the French CAC 40 Index is just below the unchanged line.

In the bond market, treasuries have shown a lack of direction, contributing to the volatility on Wall Street. Currently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 1.465 percent.

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