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New York - US stocks fluctuated amid data that indicated growth remains slow but steady, while remarks from policy makers signaled they’re moving closer to raising interest rates.
The S&P 500 Index fell 0.1% to 2 169.36 at 15:33, after energy producers surged the most in eight months yesterday to lead the gauge to a second day of gains.
“Crude is flattish, and we might be giving back some of the gains we saw the last two days,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. in Milwaukee.
“There are four Fed speakers today, which has the potential to have some impact. Also, at this point, without a clear catalyst, people are starting to look at earnings.”
The first output-reduction decision by OPEC in eight years on Wednesday surprised traders, who had expected no agreement, and lifted crude by the most since April. The main US equity benchmark closed above its average price during the past 50 days, while erasing a monthly drop of as much as 2.1%. The index was on track for a third-straight weekly gain, the longest stretch since July.
Federal Reserve Bank of Atlanta President Dennis Lockhart said today the central bank is nearing its goals of maximum employment and steady inflation near 2%, leaving the economy primed for an increase in borrowing costs. Philadelphia Fed President Patrick Harker earlier said policy makers should begin raising rates to get ahead of inflation and avoid “falling behind the curve.”
Turbulence in equity markets has subsided, after a surge in early September. The CBOE Volatility Index was down 7.7% this month at Wednesday’s close, erasing an increase that reached 35% two weeks ago.
The Federal Reserve’s decision to leave rates unchanged and signal a slower pace of future increases soothed investors, while gains in crude also helped boost equities.
Investors are awaiting further data to corroborate Fed chair Janet Yellen’s comments on Wednesday that the current economic course calls for a gradual increase in rates.
A report today showed the economy expanded more in the second-quarter than previously estimated. Fewer Americans than forecast filed for jobless benefits last week, according to another reading, indicating employers are leery of dismissing workers as the labor market tightens. A gauge on pending home sales is due later.
Alcoa Inc. unofficially kicks off the next earnings season when it reports results in about two weeks. Analysts forecast a drop of 1.5% in S&P 500 company profits in the third quarter. That would mark a sixth consecutive decline, the longest since the financial crisis.
“There’s a slightly positive underlying trend for US stocks, but without any news it’s going to stay flat,” said Otto Waser, chief investment officer of R&A Group Research & Asset Management in Zurich. “We’re now waiting for the next big moment - the elections, and before that, the earnings season. Oil had an impact on US stocks yesterday. We still need to see the details of the agreement.”
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