Stocks have seen considerable volatility over the course of the trading day on Thursday, with the major averages showing wild swings back and forth across the unchanged line following the strong upward move seen in the previous session.
Currently, the major averages are little changed on the day. While the Nasdaq is down 17.27 points or 0.2 percent at 11,774.63, the Dow is up 4.32 points or less than a tenth of a percent at 31,585.60 and the S&P 500 is up 2.39 points or 0.1 percent at 3,982.26.
The choppy trading on Wall Street comes as traders digest comments from Federal Reserve Chair Jerome Powell, who reiterated the central bank’s commitment to aggressively fighting inflation.
“We need to act now, forthrightly, strongly as we have been doing,” Powell said during a Q&A session at the Cato Institute’s 40th Annual Monetary Conference. “And we have to keep at it until the job is done.”
Powell also once again warned about the dangers of allowing elevated prices to become entrenched, noting the Fed has a “responsibility” to bring inflation back down to 2 percent.
“The longer inflation remains well above target, the greater the risk the public does begin to see higher inflation as the norm, and that has the capacity to raise the costs of getting inflation down,” he said.
The Fed chief’s tone was similar to the speech he delivered at last month’s Jackson Hole economic symposium, which helped trigger the recent sell-off on Wall Street.
Powell’s comments are seen as reinforcing expectations that the Fed will raise interest rates by another 75 basis points at its next meeting later this month.
CME Group’s FedWatch Tool currently indicates an 86.0 percent chance of a 75 basis point rate hike at the September 20-21 meeting and just a 14.0 percent chance of a 50 basis point rate hike.
While some traders have applauded the consistency of Powell’s message, concerns about higher interest rates and the impact on the economy continue to weigh on the markets.
Sector News
Reflecting the lackluster performance by the broader markets, most of the major sectors are showing only modest moves in afternoon trading.
Biotechnology stocks continue to turn in a strong performance, however, with the NYSE Arca Biotechnology Index surging by 2.2 percent.
Vaccine maker Moderna (MRNA) continues to post a strong gain after Deutsche Bank upgraded its rating on the company’s stock to Buy from Hold.
Significant strength also remains visible among banking stocks, as reflected by the 2.1 percent jump by the KBW Bank Index.
On the other hand, airline stocks are pulling back sharply after soaring in the previous session, resulting in a 2.1 percent nosedive by the NYSE Arca Airline Index.
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 spiked by 2.3 percent, while China’s Shanghai Composite Index dipped by 0.3 percent.
The major European markets also finished the day mixed. While the German DAX Index edged down by 0.1 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index both rose by 0.3 percent.
In the bond market, treasuries have moved lower over the course of the session after seeing early volatility. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.3 basis points at 3.298 percent.
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