U.S. Stocks Likely To Move Back To The Downside In Early Trading

wallstreet july16 16jun22 lt

After finishing the previous session sharply higher, stocks are likely to move back to the downside in early trading on Thursday. The major index futures are currently pointing to a significantly lower open for the markets, with the S&P 500 futures down by 1.7 points.

Concerns aggressive monetary policy action by central banks around the world may trigger a global recession are likely to weigh on Wall Street.

Following the Federal Reserve's widely expected 75 basis point interest rate hike on Wednesday, the Swiss National Bank unexpectedly raised interest rates for the first time since 2007.

The Bank of England also announced another 25 basis point rate hike. The BoE's Monetary Policy Committee voted 6-3 to raise the bank rate to 1.25 percent, the highest rate since early 2009.

In U.S. economic news, the Labor Department released a report showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended June 11th.

The report showed initial jobless claims edged down to 229,000, a decrease of 3,000 from the previous week's revised level of 232,000.

Economists had expected jobless claims to dip to 220,000 from the 229,000 originally reported for the previous week.

Meanwhile, a separate released by the Commerce Department showed new residential construction in the U.S. plunged by much more than expected in the month of May.

The Commerce Department said housing starts tumbled by 14.4 percent to an annual rate of 1.549 million in May after jumping by 5.5 percent to a revised rate of 1.810 million in April.

Economists had expected housing starts to decrease by 1.3 percent to an annual rate of 1.701 million from the 1.724 million originally reported for the previous month.

The report also showed building permits slumped by 7.0 percent to an annual rate of 1.695 million in May after falling by 3.0 percent to a revised rate of 1.823 million in April.

Building permits, an indicator of future housing demand, were expected to decline by 1.9 percent to an annual rate of 1.785 million from the 1.819 million originally reported for the previous month.

The Federal Reserve Bank of Philadelphia also released a report showing a modest contraction in regional manufacturing activity in the month of June.

Following the mixed performance seen during trading on Tuesday, stocks showed a strong move to the upside in Wednesday's session. With the upward move, the Dow and the S&P 500 regained ground after ending Tuesday's session at their lowest closing levels in over a year.

The major averages pulled back off their highs going into the close but remained firmly positive. The Dow jumped 303.70 points or 1 percent to 30,668.53, the Nasdaq spiked 270.81 points or 2.5 percent to 11,099.15 and the S&P 500 surged 54.51 points or 1.5 percent to 3,789.99.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index rose by 0.4 percent, while China's Shanghai Composite Index fell by 0.6 percent.

Meanwhile, the major European markets have all shown significant moves to the downside on the day. While the French CAC 40 Index has tumbled by 2.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both down by 2.6 percent.

In commodities trading, crude oil futures are slumping $1.51 to $113.80 a barrel after plunging $3.62 to $115.31 a barrel on Wednesday. Meanwhile, after rising $6.10 to $1,819.60 an ounce in the previous session, gold futures are climbing $12.20 to $1,831.80 an ounce.

On the currency front, the U.S. dollar is trading at 132.81 yen versus the 133.84 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0424 compared to yesterday's $1.0444.

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