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Major Averages Continue To Turn In Mixed Performance In Mid-Day Trading

wallstreet oct26 17jun21 lt

After moving in opposite directions early in the session, the major U.S. stock indexes continue to turn in a mixed performance in mid-day trading on Thursday. The Nasdaq has shown a notable move to the upside, while the Dow has slid firmly into negative territory.

Currently, the tech-heavy Nasdaq is off its best levels of the day but remained up 98.47 points or 0.7 percent at 14,138.16. Meanwhile, the Dow is down 285.25 points or 0.8 percent at 33,748.42 and the S&P 500 is down 9.87 points or 0.2 percent at 4,213.83.

With the drop on the day, the Dow is extending a recent downward trend, falling to its lowest intraday level in nearly a month.

The mixed performance on Wall Street comes as traders continue to digest yesterday's announcement from the Federal Reserve, which saw the central bank move up its timeline for raising interest rates.

The Fed previously predicted that interest rates would remain at near-zero levels through 2023, but the latest projections point to two rate hikes during that year.

The shift in the timeline comes as the Fed also forecast much faster core consumer price inflation this year, although the accompanying statement still attributed the increase in inflation to "transitory factors."

The statement did not hint at a shift in Fed officials' thinking about the central bank's asset purchase program, but the new interest rate forecast still suggests tapering is likely in the coming months.

The Fed's asset purchase program has been credited with helping to prop up the stock markets during the coronavirus pandemic, with stocks reaching record highs despite significant economic hardship.

On the economic front, the Labor Department released a report showing an unexpected uptick in initial jobless claims in the week ended June 12th.

The report said initial jobless claims rose to 412,000, an increase of 37,000 from the previous week's revised level of 375,000.

The increase surprised economists, who had expected jobless claims to edge down to 359,000 from the 376,000 originally reported for the previous week.

Jobless claims had declined in eight out of the nine previous weeks, falling to their lowest levels since March of 2020.

A separate report from the Federal Reserve Bank of Philadelphia showed Philadelphia-area manufacturing activity expanded at a slightly slower rate in the month of June.

Meanwhile, the Conference Board released a separate report showing another significant increase by its index of leading U.S. economic indicators.

Sector News

Energy stocks have moved sharply lower over the course of the session, with a steep drop by the price of crude oil weighing on the sector. Crude for July delivery is tumbling $1.60 to $70.55 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 7.3 percent, the NYSE Arca Oil Index is down by 3.7 percent and the NYSE Arca Natural Gas Index is down by 3.1 percent.

A nosedive by the price of gold is also contributing to substantial weakness among gold stocks, with the NYSE Arca Gold Bugs Index plunging by 5.7 percent to its lowest intraday level in over a month.

The sell-off by gold stocks comes as the price of gold for August delivery is plummeting $84.50 to $1,776.90 an ounce, as the value of the U.S. dollar spikes in reaction to the Fed announcement.

Significant weakness also remains visible among steel stocks, as reflected by the 4.3 percent slump by the NYSE Arca Steel Index. The index has also fallen to its lowest intraday level in over a month.

Banking, chemical and transportation stocks are also seeing considerable weakness on the day, while the tech-heavy Nasdaq continues to benefit from strength among semiconductor and software stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index slumped by 0.9 percent, while China's Shanghai Composite Index crept up by 0.2 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index fell by 0.4 percent, the German DAX Index inched up by 0.1 percent and the French CAC 40 Index rose by 0.2 percent.

In the bond market, treasuries have shown a notable rebound after coming under pressure following the Fed announcement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 6.3 basis points at 1.506 percent.

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