Major US indices were mixed early on Thursday after the Federal Reserve stepped up its timeline for rate hikes, with two increases now likely set to take place in 2023.
As of 1515 BST, the Dow Jones Industrial Average was down 0.55% at 33,847.94, while the S&P 500 was 0.19% weaker at 4,215.84 and the Nasdaq Composite came out the gate 0.21% stronger at 14,069.31.
The Dow opened 185.73 points lower on Thursday, extending losses recorded in the previous session as eyes were fixed on the Federal Reserve.
The move by Central bankers in the US to nudge up their individual projections for short-term interest rates in 2022 and 2023 at their two-day policy meeting remained in focus on Thursday, with the median projection of participants on the Federal Open Market Committee now being for two hikes in 2023.
However, Fed chair Jerome Powell stated the projections should be taken with “a big grain of salt” and said the central bank would continue to monitor the US economic recovery and vowed to provide “advanced notice” before any updates regarding the tapering of the central bank’s bond-buying program.
On the macro front, weekly jobless claims rose last week for the first time since April, according to the Department of Labor, with initial unemployment claims increasing by 37,000 over the week ending on 12 June to reach 412,000 – well ahead of analyst forecasts a reading of 350,000.
The four-week moving average, however, which smoothes out the variations in the claims figures from one week to the next, slipped by 8,000 to 395,000. Secondary unemployment claims, which reference the week ending on 5 June, edged up by 1,000 to 3.518m.
Elsewhere, manufacturing activity in the US mid-Atlantic region continued growing at a robust pace in June, the results of one of the most closely followed surveys for the sector showed. The Federal Reserve Bank of Philadelphia’s factory sector index dipped from May’s reading of 31.5 to 30.7 for June. Economists had projected a fall to 30.5.
Still on data, the Conference Board’s leading economic index increased by 1.3% in May to 114.5 in May, following a 1.3% increase in April and a 1.4% increase in March, with the CB now forecasting real GDP growth in the second quarter of 2021 could reach 9% on an annualised basis and year-on-year economic growth of 6.6% for the year as a whole.
Lastly, testimony from Treasury Secretary Janet Yellen before the Senate Finance Committee was slated to commence shortly.
In the corporate space, Lennar was in the green after posting better-than-expected earnings, while Adobe and Kroger will both report earnings on Thursday,
Wells Fargo and Citigroup traded lower at the bell despite hopes that higher rates will drive profits for banks, as did trade bellwether Caterpillar.
