U.S. Stocks May See Further Downside Ahead Of Powell Speech

(RTTNews) - After recovering from their worst levels but still ending Wednesday's trading mostly lower, stocks are likely to see continued weakness in early trading on Thursday. The major index futures are currently pointing to a lower open for the markets with the S&P 500 futures down by 0.3 percent.

Lingering uncertainty about the outlook for interest rates may weigh on the markets ahead of Federal Reserve Chair Jerome Powell's highly anticipated speech at the Jackson Hole Economic Symposium on Friday.

Powell's remarks could have a significant impact on the outlook for rates ahead of the Fed's next monetary policy meeting in September.

"Powell is likely to keep his cards close to his vest, emphasize that the Fed cares very much about their dual mandate and explain that they are data dependent and will need to see the jobs report (9/5) and the two inflation reports (9/10-9/11) before they can make a determination whether or not to cut interest rates on September 17th," said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.

Ahead of Powell's speech, CME Group's FedWatch Tool is currently indicating a 79.1 percent chance the Fed will lower rates by a quarter point next month.

However, in an interview with CNBC, Kansas City Fed President Jeffrey Schmid expressed doubt about lowering interest rates in September, saying the central bank needs to "have very definitive data to be moving that policy rate."

"In September, we'll get around tables and we'll collaborate and we'll figure it out, but yeah, I think there's a lot to be said between now and September," he added.

A notable decrease by shares of Walmart (WMT) may also generate negative sentiment, with the retail giant tumbling by 3.3 percent in pre-market trading after reporting weaker than expected second quarter earnings.

On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits rose by much more than expected in the week ended August 16th.

The report said initial jobless claims climbed to 235,000, an increase of 11,000 from the previous week's unrevised level of 224,000. Economists had expected jobless claims to inch up to 225,000.

Shortly after the start of trading, the National Association of Realtors is scheduled to release its report on existing home sales in the month of July. Existing home sales are expected to slip to an annual rate of 3.90 million in July after tumbling to a rate of 3.93 million in June.

The Conference Board is also due to release its report on leading economic indicators in the month of July. The leading economic index is expected to edge down by 0.1 percent in July after falling by 0.3 percent in June.

After moving sharply higher early in the session, stocks regained ground over the course of the trading day on Wednesday. The major averages climbed well off their worst levels of the day, although the Nasdaq and the S&P 500 remained in negative territory.

The tech-heavy Nasdaq ended the day down 142.10 points or 0.7 percent at 21,172.86 after plunging by as much as 1.9 percent in early trading. The S&P 500 also dipped 15.59 points or 0.2 percent to 6,395.78, while the Dow inched up 16.04 points or less than a tenth of a percent to 44,938.31.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan's Nikkei 225 Index slid by 0.7 percent, while Australia's S&P/ASX 200 Index jumped by 1.1 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the French CAC 40 Index is down by 0.6 percent, the German DAX Index is down by 0.3 percent and the U.K.'s FTSE 100 Index is down by 0.2 percent.

In commodities trading, crude oil futures are rising $0.26 to $62.97 a barrel after surging $0.94 to $62.71 a barrel on Wednesday. Meanwhile, after jumping $29.80 to $3,388.50 an ounce in the previous session, gold futures are slipping $4.90 to $3,383.60 an ounce.

On the currency front, the U.S. dollar is trading at 147.69 yen versus the 147.33 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1649 compared to yesterday's $1.1652.