US open: Dow plunges over 200 points ahead of Yellen's speech

US stocks were firmly in the red early on Thursday, ahead of a widely anticipated speech from Federal Reserve chairwoman Janet Yellen.

Shortly after 1500 BST, the Dow Jones Industrial Average was down 204 points to 16,075.62, while the S&P 500 and the Nasdaq were 24 and 62 points lower respectively.

Yellen will address the University of Massachusetts Amherst at 2200 BST in what will be her first speech since the US central bank opted against hiking interest rates last week.

“Investors don’t know what to make of the market landscape at the moment, with the indices lurching between losses and gains throughout the morning,” said Spreadex’s financial analyst Connor Campbell.

“The lack of a consistent trading direction is likely a product of a market cocktail containing a dash of post-Fed statement confusion, a shot of lingering China-fear, and a sprinkling auto-sector sickness, a brew that leaves few economic anchors for investors to cling to.”

Better-than-expected data

According to the Labor Department, new claims rose by 3,000 to 267,000 in the week to 19 September, compared with analysts' expectations for a 272,000 reading.

Meanwhile, the average of new claims over the last four weeks fell by 750 to a seasonally adjusted 271,750, the report added.

The four-week average is considered more reliable as it smooths out sharp fluctuations in the more volatile weekly report and, as such, is seen as a more accurate indicator of the health of the labour market.

Meanwhile, according to the Commerce Department, orders for long-lasting goods declined 2% in August compared with the 2.3% drop analysts had forecast and with the 1.9% increase registered in the previous month.

Excluding transportation, however, orders were unchanged, while orders for core capital goods fell 0.2%

"The downward revision to inventories in July and flat reading for August suggest an even sharper drag on GDP growth from private inventory investment in the third quarter than had been tracking ahead of the report," analysts at Barclays said.

"This larger anticipated drag from inventories offset the boost from better equipment investment. On net, our third quarter GDP tracking estimate fell one-tenth to 2.2%."

There was more positive news from the housing market, as new home sales rose 5.2% in August, reaching their highest rate since 2008.

Elsewhere, Asian equity markets struggled for direction on Thursday, as Japanese stocks were dragged lower by a slump in car stocks and tepid economic data, while European stocks were in the red.

The dollar was broadly flat against the pound but declined 0.75% against the yen and 0.68% against the euro.

Gold futures climbed 1.19% to $1,145.00, while oil prices were mixed, with West Texas Intermediate losing 0.43% to $44.29 a barrel, while Brent rose 0.17% to $47.83 a barrel.

In company news, while Nike, Bed Bath and Beyond and Jabil Circuit will publish results after the closing bell.