Indexes rebounded after comments from Fed Chair Jerome Powell suggested the central bank may continue to pause interest rate hikes. Treasury yields fell after his prepared remarks came out.
Major market indexes jumped upon the release of Powell’s remarks, but soon gave back gains and were back down.
The Nasdaq composite, S&P 500, and Dow Jones Industrial Average were down 0.3% to 0.4% around midday. Volume rose on the New York Stock Exchange and Nasdaq compared with the same time on Wednesday.
The Innovator IBD 50 (FFTY) exchange-traded fund lagged with a 1.3% decline. The ETF also has met resistance at the 50-day line. The Russell 2000 index was flat at midday.
Speaking at the Economic Club of New York, Powell said he is encouraged by the slowing trend in inflation and the Fed will “proceed carefully” with monetary policy.
He added that the Fed is attentive to the resilience of economic growth and the job market. If those trends continue, more rate hikes cannot be ruled out. Powell also said the Fed is paying attention to rising longer-term yields.
Treasury yields eased after Powell’s speech. The 10-year yield was up 1 basis point to 4.91%. Earlier Thursday, the yield was up at 4.97%. The benchmark yield is on track for a fourth-straight advance after rising to its highest level since July 2007 on Wednesday.
Jobless claims last week fell by 13,000 to 198,000, the Labor Department reported earlier Thursday. That was below economist expectations of 211,000 and reflected a job market that has yet to cool off significantly.
But the index of leading economic indicators grew worse in September with a -0.7% reading from -0.5% the previous month. Economists had expected -0.4%.
Existing home sales fell 2% from the previous month to 3.96 million units. That’s the fourth straight month of declines and the lowest level since 2010, said BMO Capital Markets economist Jay Hawkins.
“There’s no relief in sight for the battered U.S. housing market absent a sharp drop in mortgage rates — the 30-year fixed rate averaged 7.20% in September, the highest in over two decades,” he said.
On a year-over-year basis, sales fell 15.4%, the National Association of Realtors said.
In terms of individual stocks, Tesla (TSLA) sold off nearly 9% after the electric-vehicle company missed third-quarter profit and sales expectations. Chief Executive Elon Musk also tempered expectations about the company’s planned Cybertruck, saying the pickup truck program faces “enormous challenges.”
Netflix (NFLX) jumped 15% in heavy trading but gave back some gains after crossing above its 50-day moving average. The video streaming service beat profit expectations late Wednesday for the third quarter, which also saw a surprisingly strong jump in subscribers.
Taiwan Semiconductor (TSM) rallied 5.5% and climbed back above the 200-day moving average in heavy trading. The chipmaker beat earnings estimates and gave a current-quarter forecast that was above analyst estimates. The stock could be forming a new base.
AT&T (T) jumped 7% to a one-month high after the company beat earnings and revenue expectations and its wireless subscriber additions topped estimates.
In contrast, health care stocks fell broadly, with Eli Lily (LLY) falling more than 3% in heavy trading. The Health Care Select Sector SPDR (XLV) was down 1%, one of the worst-performing S&P sector ETFs that day. Selling has been especially heavy in drug stocks, with the SPDR S&P Pharmaceuticals ETF (XPH) down 16% from its Aug. 31 high.
Roche (RHHBY) sold off after the drugmaker cited declining demand for Covid products in its third-quarter results.
Finally, Blackstone (BX) gapped down to a loss of nearly 6%. With a loss of more than 10% from its 108.77 buy point, the stock has made a sell signal. It’s also falling deeper below the 50-day line. The world’s largest alternative asset management firm earlier Thursday missed third-quarter profit and revenue expectations, according to FactSet.
Overall, the stock market showed mixed reactions to Powell’s remarks and other economic indicators. While some stocks experienced significant declines, others saw gains. Investors will likely continue to monitor the Fed’s stance on interest rates and the overall health of the economy to inform their investment decisions moving forward.