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US open: Stocks trade lower as Fed vows to keep interest rates at current levels

By Iain Gilbert

Date: Thursday 17 Sep 2020

US open: Stocks trade lower as Fed vows to keep interest rates at current levels

(Sharecast News) - Wall Street stocks opened lower on Thursday after the Federal Reserve vowed to keep interest rates at their current level until 2023 and market participants mulled over some conflicting statements around the roll-out of a potential coronavirus vaccine.
As of 1555, the Dow Jones Industrial Average was down 0.21% at 27,974.05, while the S&P 500 was 0.59% weaker at 3,365.53 and the Nasdaq Composite came out the gate 0.99% softer at 10,940.61.

The Dow Jones opened 58.33 points lower on Thursday, reversing gains recorded in the previous session.

On Wednesday evening, the Federal Open Markets Committee said the US overnight rate could remain zero-bound for the next three years as part of an effort to prompt inflation. Fed Chairman Jerome Powell also said the Fed would maintain easy monetary policy until "maximum employment" can be achieved.

Also from the overnight, Donald Trump said the US may be capable of distributing a Covid-19 vaccine as soon as October, contradicting comments made by the Centers for Disease Control and Prevention, which said earlier in the day that vaccinations would be in limited quantities and not widely distributed for another six to nine months.

Stimulus talks were also in focus after Trump indicated he could potentially see himself supporting a larger package.

As far as Thursday was concerned, the day's primary focus was this week's batch of jobless claims figures from the Department of Labor, which revealed US unemployment claims only dipped a little over the preceding week.

According to the Department of Labor, initial jobless claims slipped by 33,000 over the week ending on 12 September to reach 860,000 (consensus: 850,000). Secondary claims, on the other hand, dropped by 916,000 to approximately 12.63m (consensus: 13.0m).

Still on the macro front, the US housing market cooled a bit last month but economists were quick to dismiss the drop, pointing to the impact of hurricanes on activity in the South and strength in permits for the construction of new single-family homes.

According to the Department of Commerce, in seasonally adjusted terms, housing starts fell at a month-on-month pace of 5.1% to reach an annualised rate of 1.416m (consensus: 1.45m). Building permits dipped by 0.9% on the month to 1.48m but those for single-family homes increased by 6.0% to 1.04m.

Elsewhere, manufacturing sector conditions in the US mid-Atlantic region continued to firm in September as the Federal Reserve Bank of Philadelphia's closely-followed factory sector index dipped from a reading of 17.2 in July to 15.0 for August.

No major earnings were slated for release on Thursday.

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