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U.S. Stocks Fluctuate After Early Move To The Upside

After an initial move to the upside, stocks have fluctuated over the course of the trading session on Thursday. The major averages pulled back off their early highs and briefly dipped below the unchanged line but have moved back to the upside since then.

Currently, the major averages are all in positive territory. The Dow is up 149.12 points or 0.4 percent at 38,052.41, the Nasdaq is up 90.18 points or 0.6 percent at 15,695.66 and the S&P 500 is up 15.62 points or 0.3 percent at 5,034.01.

The early strength on Wall Street came as traders continued to digest the Federal Reserve’s monetary policy announcement on Wednesday.

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Stocks may have benefitted from easing concerns the Fed’s next monetary policy move could actually be an interest rate hike rather than a cut, which Fed Chair Jerome Powell called “unlikely” in his post-meeting press conference.

“A market concern coming into [yesterday’s] FOMC meeting was that the Fed might shift gears to a more hawkish tone, including potential rate hikes, based on recently hotter CPI readings,” said Larry Tentarelli, Chief Technical Strategist, Blue Chip Daily Trend Report.

“Powell seemed to push back on the idea of rate hikes,” he added. “His early commentary today was that the FOMC believes that current rates are restrictive and are weighing on demand. Powell also stated that the Fed believes that ‘policy stance is appropriate to the current situation.'”

The Fed’s next monetary policy meeting is scheduled for June 11-12, with the central bank widely expected to leave rates unchanged once again.

The early buying interest may have been partly offset by the latest batch of U.S. economic data, including a Labor Department report showing a surge by labor costs in the first quarter of 2024.

The Labor Department said unit labor costs soared by 4.7 percent in the first quarter following a revised unchanged reading in the fourth quarter.

Economists had expected labor costs to shoot up by 3.2 percent compared to the 0.4 percent increase that had been reported for the previous quarter.

“Productivity growth wasn’t strong enough to significantly mitigate the rise in wages last quarter,” said Nationwide Financial Markets Economist Oren Klachkin.

He added, “The strong rise in unit labor costs is another in a string of recent data points indicating that inflation pressures remain relatively high.”

A separate Labor Department showed initial jobless claims came in unchanged last week, while a Commerce Department report showed the U.S. trade deficit narrowed slightly in March.

Sector News

Transportation stocks have shown a significant move to the upside on the day, driving the Dow Jones Transportation Average up by 1.9 percent.

Avis Budget (CAR) and C.H. Robinson Worldwide (CHRW) have moved sharply higher after reporting their quarterly results.

Notable strength is also visible among oil service stocks, as reflected by the 1.4 percent gain being posted by the Philadelphia Oil Service Index. The index is bouncing off its lowest closing level in almost two months.

Tobacco, retail and brokerage stocks have also moved to the upside on the day, while networking stocks are seeing some weakness.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday. While Hong Kong’s Hang Seng Index surged by 2.5 percent, Japan’s Nikkei 225 Index edged down by 0.1 percent and South Korea’s Kospi dipped by 0.3 percent.

The major European markets have also turned mixed on the day. While the U.K.’s FTSE 100 Index is up by 0.6 percent, the German DAX Index is down by 0.1 percent and the French CAC 40 Index is down by 0.8 percent.

In the bond market, treasuries have moved back to the downside following the rally seen on Wednesday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.0 basis points at 4.635 percent.

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