WASHINGTON (dpa-AFX) - Following the pullback seen late in the previous session, stocks may see some further downside in early trading on Thursday. The major index futures are currently pointing to a sharply lower open for the markets, with the Dow futures down by 314 points.
Concerns about the economic outlook may weigh on the markets following indications the Federal Reserve plans to leave interest rates at near-zero levels for years to come.
The Fed's dovish monetary policy announcement on Wednesday was expected to help calm the markets, although investors seem to be viewing the central bank's projections as a sign the recovery will not be as swift as many were hoping.
In his post-meeting press conference, Fed Chair Jerome Powell cautioned that the pace of the economic recovery is expected to slow and urged for fiscal stimulus from Congress to sustain the recovery.
However, lawmakers have remained at an impasse over a new coronavirus stimulus bill for weeks, and the upcoming elections could make reaching a compromise more difficult.
Negative sentiment may also be generated in reaction to a report from the Labor Department showing first-time claims for U.S. unemployment benefits fell less than expected in the week ended September 12th.
The Labor Department said initial jobless claims slipped to 860,000, a decrease of 33,000 from the previous week's revised level of 893,000.
Economists had expected jobless claims to dip to 850,000 from the 884,000 originally reported for the previous week.
The Commerce Department also released a report showing new residential construction pulled back by much more than expected in the month of August.
The report said housing starts tumbled by 5.1 percent to an annual rate of 1.416 million in August after soaring by 17.9 percent to a revised rate of 1.492 million in July.
Economists had expected housing starts to pullback by 1.2 percent to a rate of 1.478 million from the 1.496 million originally reported for the previous month.
The Labor Department said building permits also fell by 0.9 percent to an annual rate of 1.470 million in August after spiking by 17.9 percent to a revised rate of 1.483 million in July.
Building permits, an indicator of future housing demand, had been expected to increase by 1.7 percent to a rate of 1.520 million from the 1.495 million originally reported for the previous month.
A separate report from the Federal Reserve Bank of Philadelphia showed a modest slowdown in the pace of growth in regional manufacturing activity.
After seeing strength for much of the session, stocks pulled back sharply in the final hour of trading on Wednesday. The tech-heavy Nasdaq showed a particularly steep drop, while the Dow managed to cling to a modest gain.
The major averages eventually ended the session mixed. While the Dow inched up 36.78 points or 0.1 percent to 28,032.38, the Nasdaq plunged 139.85 points or 1.3 percent to 11,050.47 and the S&P 500 slid 15.71 points or 0.5 percent to 3,385.49.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index declined by 0.7 percent, while China's Shanghai Composite Index fell by 0.4 percent.
The major European markets have also moved to the downside on the day. While the French CAC 40 Index has slumped by 1 percent, the German DAX Index is down by 0.8 percent and the U.K.'s FTSE 100 Index is down by 0.4 percent.
In commodities trading, crude oil futures are slipping $0.23 to $39.93 a barrel after surging up $1.88 to $40.16 a barrel on Wednesday. Meanwhile, after rising $4.30 to $1,970.50 an ounce in the previous session, gold futures are plunging $19 to $1,951.50 an ounce.
On the currency front, the U.S. dollar is trading at 104.54 yen versus the 104.95 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1803 compared to yesterday's $1.1816.
Copyright RTT News/dpa-AFX