FX.co ★ U.S. Stocks Fluctuate After Early Move To The Upside

In Thursday's trading session, stocks have demonstrated a degree of volatility. Following an initial rise, the major averages briefly recoiled to a level slightly lower than where they began before rebounding into positive terrain. At the time of reporting, the Dow is up by 149.12 points (0.4%) at 38,052.41; the Nasdaq by 90.18 points (0.6%) at 15,695.66; and the S&P 500 by 15.62 points (0.3%) at 5,034.01.

The early uptick can be attributed to traders still processing the Federal Reserve's monetary policy announcement delivered on Wednesday. Market concerns that the Fed's next step might be an interest rate hike were somewhat allayed by Fed Chair Jerome Powell's comment that such a move is "unlikely."

"There was worry in the market leading up to the FOMC meeting that the Fed might pivot towards a more hawkish tone, hinting at possible rate hikes due to recent inflation data," said Chief Technical Strategist Larry Tentarelli, from Blue Chip Daily Trend Report. "Powell seemed to argue against this notion," he added. "His remarks indicated that the FOMC believes the current rates are restrictive and may be curbing demand."

The next meeting of the Federal Reserve's policy-making committee is due on June 11-12, with the expectation being that rates will remain as they are. The initial market optimism was likely tempered by the latest batch of U.S. economic data, which indicated a surge in labor costs for the first quarter of 2024.

The Labor Department reports a 4.7% increase in unit labor costs for this quarter, following a static reading for the last quarter. This is higher than what economists had anticipated, a 3.2% rise, compared to the 0.4% uptick reported for the preceding quarter. Oren Klachkin, an economist at Nationwide Financial Markets, said, "Productivity growth wasn't robust enough to significantly counterbalance the wage increase in the previous quarter." He further added that recent data, including the sharp increase in unit labor costs, suggests that inflationary pressures continue to be relatively high.

In Thursday's sector news, transportation stocks have made significant progress, with the Dow Jones Transportation Average up by 1.9%. Avis Budget (CAR) and C.H. Robinson Worldwide (CHRW) reported encouraging quarterly results, which likely contributed to some of this momentum. Oil service stocks are also performing well, while networking stocks are demonstrating some weakness.

External markets showed mixed performance, with Hong Kong's Hang Seng Index realizing a 2.5% increase, while Japan's Nikkei 225 Index decreased by 0.1% and South Korea's Kospi Index by 0.3%. Concurrently, Europe's major markets showed a similarly mixed reaction. The FTSE 100 Index in the U.K. saw an increase of 0.6% while Germany's DAX Index and France's CAC 40 Index reported decreases of 0.1% and 0.8% respectively.

In the bond market, treasuries have spiraled downwards after Wednesday's rally. Consequently, the yield on the benchmark ten-year note, which moves inversely to its price, has increased by 4.0 basis points to 4.635%.