- US stocks fell Thursday as investors considered the impact of the Fed tapering asset purchases this year.
- The number of Americans filing for unemployment insurance dropped to a new pandemic-era low last week.
- Oil prices fell for the sixth straight day; gold was flat.
US stocks traded lower on Thursday, led by the Dow Jones industrial average, as investors fret over the possibility of tapering by the Federal Reserve towards the end of this year and mull the prospects for the economic recovery as Delta variant cases surge.
The Dow slipped nearly 200 points while the benchmark S&P 500 Index traded lower for the third straight third day.
Minutes from the Fed’s July meeting released on Wednesday indicate that the central bank may start tapering asset purchases before the end of the year.
Here’s where US indexes stood at the 9:30 a.m. ET open on Thursday:
- S&P 500: 4,380.74, down 0.44%
- Dow Jones Industrial Average: 34,789.17, down 0.49% (171.52 points)
- Nasdaq Composite: 14,461.67, down 0.44%
The Fed, in response to the pandemic recession, began its bond-buying purchase more than a year ago in a bid to stabilize credit markets. But now, central bankers indicated that the employment benchmark they are observing to scale back support “could be reached this year,” according to minutes.
“The Federal Reserve should start taking away the punchbowl by tapering after the next strong jobs report, potentially as soon as early September,” Richard Saperstein, CIO at Treasury Partners, said in a note. “After some initial stock market volatility, the market will likely appreciate the Fed’s tapering.”
Saperstein added that market sentiment is growing less exuberant as it digests rising COVID-19 cases.
All eyes now will be on the high-profile annual Jackson Hole conference of central bankers from August 26-28. Some though, including economist Mohamed El-Erian, think this will offer little direction. Instead, El-Erian said he is looking to the Federal Open Market Committee meeting on September 22 for more signals.
US Treasury yields slipped, with the benchmark 10-year note hovering around 1.23% after hitting a session high of 1.30%.
In economic news, the number of Americans filing for unemployment insurance dropped to a new pandemic-era low last week.
Weekly jobless claims totaled an unadjusted 348,000 last week, the Labor Department said, lower than the 363,000 figure economists surveyed by Bloomberg expected. The print marked a fourth straight decline and places claims at their lowest level since March 14, 2020.
Gold was trading flat, down by 0.36%, to $1,787.14 per ounce.