U.S. Stocks May Extend Yesterday's Late-Day Sell-Off In Early Trading

Following the sell-off seen late in the previous session, stocks are likely to see further downside in early trading on Thursday. The major index futures are currently pointing to a notably lower open for the markets, with the S&P 500 futures down by 0.9 percent.

Concerns about the outlook for interest rates may continue to weigh on Wall Street following the Federal Reserve’s monetary policy announcement on Wednesday.

While the Fed left interest rates unchanged as widely expected, the central bank forecast another rate hike before the end of the year as well as keeping rates at elevated levels for longer than previously anticipated.

“12 of 19 governors at this point currently favor one more interest rate increase in the next two meetings before the end of the year,” said Alex McGrath, Chief Investment officer for NorthEnd Private Wealth. “Additionally the dot plot for rate expectations in 2024 was higher than it had been in previous meetings signaling a hawkish outlook for rates next year, cementing their higher for longer stance.”

He added, “Heading into the fourth quarter with rate expectations remaining elevated, we are more than likely in for a choppy end of the year as the markets digest an outlook less favorable for the growth assets that have driven the market for 2023.”

Potentially adding to the concerns about interest rates, the Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits unexpectedly fell to a seven-month low in the week ended September 16th.

The report said initial jobless claims dipped to 201,000, a decrease of 20,000 from the previous week’s revised level of 221,000.

Economists had expected jobless claims to inch up to 225,000 from the 220,000 originally reported for the previous week.

With the unexpected decrease, jobless claims fell to their lowest level since hitting 199,000 in the week ended January 28th.

Not long after the start of trading, the National Association of Realtors is scheduled to release its report on existing home sales in the month of August. Existing home sales are expected to rise to an annual rate of 4.10 million in August from a rate of 4.07 million in July.

The Conference Board is also due to release its report on leading economic indicators in the month of August. The leading economic index is expected to decrease by 0.3 percent in August after falling by 0.4 percent in July.

With renewed concerns about the outlook for interest rates weighing on the markets, stocks moved mostly lower over the course of the trading session on Wednesday.

The major averages spent much of the session on opposite sides of the unchanged but all came under pressure late in the trading day.

The tech-heavy Nasdaq led the way lower, tumbling 209.06 points or 1.5 percent to 13,469.13, its lowest closing level in almost a month.

The S&P 500 also slumped 41.75 points or 0.9 percent to a nearly one-month closing low of 4,402.20, while the Dow posted a more modest loss, slipping 76.85 points or 0.2 percent to 34,440.88.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index dove by 1.4 percent, while China’s Shanghai Composite Index slid by 0.8 percent.

The major European markets have also moved to the downside on the day. While the French CAC 40 Index has plunged by 1.7 percent, the German DAX Index is down by 1.4 percent and the U.K.’s FTSE 100 Index is down by 0.5 percent.

In commodities trading, crude oil futures are slipping $0.27 to $89.39 a barrel after sliding $0.82 to $89.66 a barrel on Wednesday. Meanwhile, after climbing $13.40 to $1,967.10 an ounce in the previous session, gold futures are tumbling $31 to $1,936.10 an ounce.

On the currency front, the U.S. dollar is trading at 147.96 yen versus the 148.34 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0635 compared to yesterday’s $1.0661.

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