The US stocks tumbled for third straight session on Thursday, 04 March 2021, dragging down the S&P 500, the Dow index, and the broader Nasdaq deep into the red terrain, after remarks from Federal Reserve Chair Jerome Powell disappointed investors by not indicating that the Fed might step up purchases of long-term bonds to hold down longer-term interest rates. At the close of trade, the Dow Jones Industrial Average index declined 345.95 points, or 1.11%, to 30,924.14. The S&P500 index dropped 51.25 points, or 1.34%, to 3,768.47. The tech-heavy Nasdaq Composite Index fell 274.28 points, or 2.11%, to 12,723.47.
The American currency surged the most in a month after Powell said the sell-off in Treasuries last week was notable and caught my attention but was not disorderly or likely to push long-term rates so high the Fed might have to intervene more forcefully. Powell's remarks reignited selling in Treasuries, with the benchmark 10-year Treasury yield jumping back above 1.5% and rising as high as 1.5830% in Asia. Last week, it had soared to a three-month top of 1.614%.
Meanwhile, Federal Reserve Chairman Jerome Powell acknowledged Thursday the reopening of the U.S. economy could lead to higher inflation but reiterated the central bank will remain patient with regard to monetary policy. However, the Fed chief said he expects the increase in inflation to be transitory, noting an acceleration in the annual rate of inflation would largely reflect comparisons to the low prices seen a year ago. Powell stressed there is a lot of ground to cover before price growth reaches a sustainable level above the Fed's 2% target. The Fed has recently signaled that interest rates will remain at near-zero levels until inflation is on track to moderately exceed 2% for some time.
The benchmark 10-year Treasury yield spiked to 1.533% after Powell's comments, which did not point to changes in the Fed's asset purchases to tackle the recent jump in yields. It still held below last week's one-year high of 1.614%.
Computer hardware stocks showed a substantial move to the downside on the day. Semiconductor, networking and biotechnology stocks also saw considerable weakness. Significant weakness was also visible among airline stocks. Steel, transportation, and brokerage stocks also showed notable moves to the downside on the day, moving lower along with most of the other major sectors.
Bucking the trend, energy stocks were higher, as crude oil for April delivery spiked $2.55 to $63.83 a barrel after OPEC and its allies agreed to extend production cuts.
ECONOMIC NEWS: US Factory Orders Surge 2.6% In January- US factory orders surged up by 2.6% in January after jumping by an upwardly revised 1.6% in December, the Commerce Department reported on Thursday. The report said orders for durable goods shot up by 3.4% in January, led by the 7.7% spike in orders for transportation equipment. Orders for non-defense aircraft and parts soared by 389.9%. Orders for non-durable goods also showed a notable increase, jumping by 1.9% in January following a 2.0% surge in December.
US Jobless Claims Inch Up To 745,000- US initial jobless claims inched up to 745,000 in the week ended February 27th, an increase of 9,000 from the previous week's revised level of 736,000, the Labor Department reported on Thursday. The uptick in jobless claims came after the drop seen in the previous week pulled claims down to their lowest level since the week ended November 28th. Meanwhile, the Labor Department said the less volatile four-week moving average fell to 790,750, a decrease of 16,750 from the previous week's revised average of 807,500.
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