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U.S. Stocks Showing A Lack Of Direction Following Recent Volatility

wallstreet2 17mar22 lt

After an early move to the downside, stocks have shown a lack of direction over the course of morning trading on Thursday. The major averages recovered from their early lows but have been bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest gains. The Dow is up 40.56 points or 0.1 percent at 34,103.66, the Nasdaq is up 18.31 points or 0.1 percent at 13,454.86 and the S&P 500 is up 8.99 points or 0.2 percent at 4,366.85.

The choppy trading on Wall Street comes as traders express some uncertainty about the near-term outlook for the markets following recent volatility.

Stocks moved sharply higher over the two previous sessions, although the rebound only partly offset the recent weakness in the markets.

Traders are also keeping an eye on the latest developments in the Russia-Ukraine war, with comments from a Kremlin spokesman pouring cold water on reports of "significant progress" in peace talks.

"On the whole, that's wrong," Kremlin spokesman Dmitry Peskov said when asked about a Financial Times report on progress toward a deal, according to Bloomberg News.

The markets also continued to digest the Federal Reserve's decision to raise interest rates for the first time since December 2018 on Wednesday.

The Fed raised rates by 25 basis points to 0.25 to 0.5 percent and signaled several more rate hikes are likely over the coming months.

On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits fell by more than expected in the week ended March 12th.

The Labor Department said initial jobless claims dipped to 214,000, a decrease of 15,000 from the previous week's revised level of 229,000.

Economists had expected jobless claims to edge down to 220,000 from the 227,000 originally reported for the previous week.

A separate report from the Commerce Department showed housing starts rebounded by much more than expected in the month of February.

The report showed housing starts spiked by 6.8 percent to an annual rate of 1.769 million in February after plunging by 5.5 percent to a revised rate of 1.657 million in January.

Economists had expected housing starts to jump by 3.2 percent to a rate of 1.690 million from the 1.638 million originally reported for the previous month.

With the much bigger than expected increase, housing starts reached their highest annual rate since hitting 1.802 million in June of 2006.

Meanwhile, the report showed building permits slumped by 1.9 percent to an annual rate of 1.859 million in February after rising by 0.5 percent to a revised rate of 1.895 million in January.

Building permits, an indicator of future housing demand, had been expected to tumble by 2.6 percent to a rate of 1.850 million from the 1.899 million originally reported for the previous month.

The Fed also released a report showing industrial production in the U.S. increased in line with economist estimates in the month of February.

Gold stocks have moved sharply higher in morning trading, resulting in a 3 percent spike by the NYSE Arca Gold Bugs Index.

The strength in the gold sector comes amid a rebound by the price of the precious metal, with gold for April delivery surging $36.30 to $1,945.50 an ounce.

A substantial rebound by the price of crude oil is also contributing to substantial strength among energy stocks. Crude for April delivery is soaring $6.45 to $101.49 a barrel after moving sharply lower over the three previous sessions.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 2.8 percent, the NYSE Arca Oil Index is up by 2.5 percent and the NYSE Arca Natural Gas Index is up by 2.1 percent.

Steel, pharmaceutical and tobacco stocks are also seeing notable strength on the day, while airline and banking stocks are giving back ground following recent strength.

In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Thursday. Japan's Nikkei 225 Index spiked by 3.5 percent, while Hong Kong's Hang Seng Index skyrocketed by 7 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index has advanced by 0.7 percent, the French CAC 40 Index is just below the unchanged line and the German DAX Index is down by 0.5 percent.

In the bond market, treasuries are regaining ground after moving sharply lower over the past several sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.3 basis points at 2.155 percent.

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