WASHINGTON (dpa-AFX) - After showing an early move to the upside, stocks remain mostly positive in mid-day trading on Thursday. With the upward move, the Nasdaq and the S&P 500 have reached new record intraday highs, while the Dow has jumped to its best level in over six months.
The major averages have given back some ground in recent trading but currently remain positive. The Dow is up 236.03 points or 0.8 percent at 28,567.95, the Nasdaq is up 23.66 points or 0.2 percent at 11,688.72 and the S&P 500 is up 13.47 points or 0.4 percent at 3,492.20.
The strength on Wall Street comes after Federal Reserve Chair Jerome Powell announced a widely expected shift with regard to the price-stability side of the central bank's dual mandate.
Powell revealed in a live-streamed speech to the Jackson Hole economic symposium that the Fed will change its approach to a 'flexible form of average inflation targeting.'
The Fed chief stressed that the longer-run goal continues to be an inflation rate of 2 percent but noted inflation will average less than that if it runs below 2 percent following economic downturns and never moves above that level even when the economy is strong.
'Households and businesses will come to expect this result, meaning that inflation expectations would tend to move below our inflation goal and pull realized inflation down,' Powell said.
He added, 'To prevent this outcome and the adverse dynamics that could ensue, our new statement indicates that we will seek to achieve inflation that averages 2 percent over time.'
Powell said appropriate monetary policy will therefore likely aim to achieve inflation moderately above 2 percent following periods when inflation has been running below that level.
The Fed chief's comments were seen as an indication the central bank will leave interest rates at near-zero levels for the foreseeable future even if there is an acceleration in the pace of inflation.
Paul Ashworth, Chief U.S. Economist at Capital Economics, expects the Fed's adoption of average inflation targeting to 'trigger additional policy stimulus in the form of stronger forward guidance and possibly additional asset purchases too.'
'But, with long-term interest rates already so low and the Fed still ruling out negative rates as undesirable, we don't expect that additional stimulus to provide any significant boost to the real economy,' Ashworth said.
On the U.S. economic front, the Labor Department released a report showing a pullback in first-time claims for U.S. unemployment benefits in the week ended August 22nd.
The report said initial jobless claims dropped to 1.006 million, a decrease of 98,000 from the previous week's revised level of 1.104 million.
Economists had expected jobless claims to decline to 1.000 million from the 1.106 million originally reported for the previous week.
A separate report from the Commerce Department showed U.S. economic activity contracted slightly less than initially estimated in the second quarter, although the report still showed a sharp drop in gross domestic product.
Meanwhile, a report from the National Association of Realtors showed a much bigger than expected jump in pending home sales in the month of July.
NAR said its pending home sales index spiked by 5.9 percent to 122.1 in July after soaring by 15.8 percent to 115.3 in June. Economists had expected pending home sales to surge up by 3.0 percent.
Pending home sales increased for the third straight month after plummeting in March and April and are now up by 15.5 percent compared to the same month a year ago.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Sector News
Airline stocks have pulled back off their best levels of the day but continue to see substantial strength in mid-day trading. The NYSE Arca Airline Index is up by 4.3 percent after reaching a two-month intraday high earlier in the session.
Significant strength also remains visible among banking stocks, as reflected by the 2.1 percent jump by the KBW Bank Index.
Software stocks have also moved sharply higher over the course of the trading day, driving the Dow Jones U.S. Software Index up by 1.4 percent to a new record intraday high.
Commercial real estate and brokerage stocks are also seeing considerable strength, while gold stocks are bucking the uptrend amid a steep drop by the price of the precious metal.
With gold for December delivery tumbling $16.70 to $1,935.80 an ounce, the NYSE Arca Gold Bugs Index is slumping by 2.7 percent.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index fell by 0.4 percent, while China's Shanghai Composite Index climbed by 0.6 percent.
Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index slid by 0.8 percent, the German DAX Index and French CAC 40 Index declined 0.7 percent and 0.6 percent, respectively.
In the bond market, treasuries have moved notably lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5 basis points at 0.737 percent.
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