US open: Dow gains over 150 points on Fed and positive economic data

US stocks surged higher on Thursday, after the Federal Reserve sent out a dovish message confirming the rate hikes will be introduced at a very slow pace, while investors digested a number of economic reports.

Just after 15:00 BST, the Dow Jones Industrial Average was up 158 points, while the S&P 500 and the Nasdaq rose 13 and 42 points respectively.

Wall Street closed on an upbeat note on Wednesday, after the Federal Open Market Committee chose to keep interest rates unchanged, as widely anticipated by economists.

David Madden, market analyst at IG said the update from the Fed struck the right balance.

“It sent a message to the market that a rate hike is coming, but it is also dependent and certain economic conditions, and this gives Yellen room to manoeuvre,” he said.

“Traders are not afraid of an interest rate increase, it is the timing of move that plays on their mind, and the Fed doesn’t want to rush in.”

Thursday data

US consumer prices rose by 0.4% month-on-month in May after edging higher by 0.1% in the month before, falling slightly short of the 0.5% analysts had expected.

At the 'core' level they increased by 0.1% over the month, while analysts expected a 0.2% increase.

Elsewhere, the current account deficit widened to $113.3bn in the first quarter, from $103.1bn in the fourth quarter of last year, largely because of a big drop in the primary income surplus.

Meanwhile, initial weekly unemployment claims decreased more-than-expected last week, hitting 267,000 against a forecast for a 277,000 reading.

"The lower-than-expected print for initial claims, particularly relative to the May survey week, suggests labor markets have continued to strengthen through mid June, in our view," analysts at Barclays said in a note.

"We look to next week’s report for a reading on survey week continuing claims, which should provide additional clarity on the strength of June labor market conditions."

The 30-year rate declined from an eight-month high of 4.04% to 4%, a report from federally controlled mortgage buyer Freddie Mac said, while the Philadelphia Fed Index jumped to 15.2 in June, beating forecasts of 9.0 reading.

No solution is sight for Greece

Elsewhere, Asian markets closed mostly lower, while European stocks were in the red as investors looked to Thursday’s Eurogroup meeting as the last chance for Greece to reach a deal with its creditors.

“There is no sign that Greece will shift its position to allow for a deal at today’s Eurogroup meeting of finance ministers,” said Berenberg analyst Holger Schmieding.

“If that meeting fails, we would expect a last attempt at the top political level thereafter to break the impasse.”

Following Wednesday’s decline, the dollar continued to fall, losing 0.32% against the euro and dropping 0.31% and 0.54% against the pound and the yen respectively, while gold futures surged 2.12% to $1,20.80.

Oil prices rose, with West Texas Intermediate gaining 0.81% to $60.41 a barrel, while Brent edged 0.65% higher to $64.29 a barrel.

In company news, drugstore chain Rite Aid slumped 3.59% after its first quarter sales missed estimates and the company lowered its outlook for the full year.

Enterprise software and computer hardware provider Oracle tumbled 8.48% after reporting a drop in fourth quarter earnings late on Wednesday.

Firearms maker Smith & Wesson Holding will report after the close.