US open: Mixed start to trading as focus switches to latest policy announcement from the Fed
By Iain Gilbert
Date: Thursday 08 Nov 2018
(Sharecast News) - Wall Street trading opened with some mixed results on Thursday following solid gains during the previous session, as the focus shifted from yesterday's mid-terms to the latest policy announcement from the Federal Reserve.
At 1455 GMT, the Dow Jones Industrial Average was up 0.02% at 26,186.52, while the S&P 500 was 0.14% lower at 2,809.88 and the Nasdaq was trading 0.29% softer at 7,548.51.
Stocks rose sharply on Wednesday, with the Dow closing up more than 500 points as investors welcomed the outcome of the elections.
However, Oanda analyst Craig Erlam said that, while strong, the post-election bounce was short-lived.
"The Fed meeting was always the lesser of the two risks but investors will still be following it extremely closely. Interest rates remaining unchanged is almost inevitability but the statement that follows will be pored over for any indication that recent market volatility has in any way softened plans for hikes this year and next.
"It was Jerome Powell that appeared to be the catalyst for the recent stock market sell-off when he suggested that interest rates were not close to neutral and could become restrictive, which got investors worried about the economic ramifications of such a move."
Erlam said it would make much more sense, given the recovery we've seen in the market, for the Fed to address the interest rate path in December when it is widely expected to rise again.
"This would give them the opportunity to clarify anything in the press conference that follows and lay out clear plans, alongside the dot plot, for the coming years. Instead today it may just emphasise the cautious and gradual approach to rate hikes."
In corporate news, shares in electric car maker Tesla were up 0.83% as it named Australian executive Robyn Denholm as its new chairman after founder Elon Musk was forced to give up the role.
Housebuilder DR Horton was down 8.59% despite posting a 49% jump in quarterly profit on the back of solid demand.
Elsewhere, telecommunications equipment manufacturer Arris International surged 11.19% in early trade after agreeing to be bought by CommScope Holding in a $7.4bn deal.
Healthcare services group Cardinal Health was down 2.52% at the bell despite turning in some better-than-expected first-quarter earnings per share, while media holding company Gannett slumped 6.52% after posting its third-quarter earnings.
Besides the Fed announcement at 1900 GMT, the only other data release for Thrsday was the most recent of US initial jobless claims figures.
The number of Americans filing for unemployment benefits nudged lower last week, according to figures from the Labor Department.
US initial jobless claims dropped by 1,000 to 214,000, in line with expectations. Meanwhile, the previous week's level was revised up by 1,000.
The four-week moving average came in at 213,750, down 250 from the previous week's average, which was revised up by 250.
The four-week average is considered more reliable as it smooths out sharp fluctuations in the more volatile weekly figures, giving a more accurate picture of the health of the labour market.
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