U.S. Stocks Continue To Lack Direction Amid Renewed Interest Rate Uncertainty

Extending the lackluster performance seen over the course of the previous session, stocks continue to show a lack of direction during trading on Thursday. The major averages have once again spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest losses. The Dow is down 13.88 points or less than a tenth of a percent at 43,944.31, the Nasdaq is down 9.71 points or 0.1 percent at 19,221.01 and the S&P 500 is down 3.61 points or 0.1 percent at 5,981.77.

Traders seem reluctant make significant moves as they digest the latest U.S. economic data and look ahead to a speech by Federal Reserve Chair Jerome Powell later this afternoon.

The Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits unexpectedly edged lower in the week ended November 9th.

The report said initial jobless claims slipped to 217,000, a decrease of 4,000 from the previous week’s unrevised level of 221,000. Economists had expected jobless claims to inch up to 223,000.

The unexpected decline pulled jobless claims down to their lowest level since hitting 216,000 in the week ended May 18th.

After yesterday’s consumer price inflation data matched expectations, the Labor Department also released a separate report showing producer prices in the U.S. also increased in line with economist estimates in the month of October.

The Labor Department said its producer price index for final demand rose by 0.2 percent in October following a revised 0.1 percent uptick in September.

Economists had expected producer prices to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.

Meanwhile, the report said the annual rate of growth by producer prices accelerated to 2.4 percent in October from an upwardly revised 1.9 percent in September.

The annual rate of producer price growth was expected to accelerate to 2.3 percent from the 1.8 percent originally reported for the previous month.

The slightly faster than expected annual price growth combined with the jobless claims data showing continued strength in the labor market has added to recent uncertainty about the outlook for interest rates.

While the Fed is still widely expected to lower interest rates by a quarter point next month, there is some concern sticky inflation will lead the central bank to slow the pace of its rate cuts in early 2025.

“A rise in the headline and core PPI indices won’t dampen percolating fears of a higher inflation environment after Wednesday’s CPI report,” said Nationwide Financial Markets Economist Oren Klachkin.

“And yet while they highlight upside risks to our inflation call, the latest data don’t completely disrupt the disinflation narrative. We’re vigilant for bumps ahead,” he added. “PPI won’t decisively alter the Fed’s easing bias, but it makes charting the policy outlook murkier.”

Traders may look for Powell to provide clarity about the outlook for rates when he speaks before an event hosted by the Dallas Regional Chamber, World Affairs Council of DFW and the Federal Reserve Bank of Dallas at 3 pm ET.

Sector News

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Airline stocks have shown a strong move back to the upside, however, with the NYSE Arca Airline Index soaring by 2.9 percent after plummeting by 7.3 percent on Wednesday.

Notable strength is also visible among housing stocks, as reflected by the 1.2 percent gain being posted by the Philadelphia Housing Sector Index.

Semiconductor and gold stocks are also seeing some strength on the day, while biotechnology stocks are extending a recent pullback.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index fell by 0.5 percent, while China’s Shanghai Composite Index tumbled by 1.7 percent and Hong Kong’s Hang Seng Index dove by 2.0 percent.

Meanwhile, the major European markets have moved to the upside on the day. While the German DAX Index is up by 1.3 percent, the French CAC 40 Index is up by 1.2 percent and the U.K.’s FTSE 100 Index is up by 0.4 percent.

In the bond market, treasuries are regaining ground after turning lower over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.5 basis points at 4.426 percent.

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