Markets drifted lower early Thursday but, repeating a pattern seen the day before, rebounded during intraday action. With the recovery, the Nasdaq ticked into positive territory while the Dow and S&P 500 have cut their losses.
The Dow (DJI) is -0.3%, the S&P 500 (SP500) is -0.2%, and the Nasdaq Composite (COMP.IND) is basically flat.
In the bond market, the 10-year Treasury yield (US10Y) is up 6 basis point to 3.81% and the 2-year Treasury yield (US2Y) has gained 6 basis points to 4.21%.
On the economic calendar, initial jobless claims figures came in higher than anticipated. Claims numbers rose to 219K, above the economist forecasted 203K level. The result also came in higher than the previous week’s reading of 193K.
Talks of a Fed pivot ramped up early this week when Wall Street rallied to start the fourth quarter. However, these have subsided somewhat in recent days as several analysts have voiced their opinion that hope for a change in central bank policy is premature. With this stymied optimism, shares have seen a lack of direction in the past couple days, with the bias mostly to the downside.
For the next Fed meeting futures are now pricing in a 71.4% chance that markets will see a 75-basis point hike compared to a 28.6% that are factoring a 50% rate hike.
Weighing in on the discussion, Minneapolis Fed official Neel Kashkari said, “I am not comfortable saying we are going to pause until we see evidence that underlying inflation is cooling.”
He added: “We are quite a ways away from a pause.”
Canaccord Genuity stated: “To date, the Fed has only had to focus on high inflation because the employment picture has remained strong. We believe that as we progress toward year-end, the economy will worsen because it will have had time to react to the tightening financial conditions.”
Among individual stocks, Compass rose amid reports of private equity interest.