US open: Stock falls signalling December Fed rate hike

Stocks in the US tumbled on Thursday after data showed US joblessness remained at a 43-year low, adding to the case for an interest rate hike in December by the Federal Reserve.

The Dow Jones Industrial Average fell 0.75% to 18,008.71 points, the S&P 500 declined 0.83% to 2,121.37 points and the Nasdaq dropped 0.9% to 5,191.77 points at 1445 BST.

The Labor Department reported that jobless claims were unchanged at 246,000 in September, below the 253,000 forecast, which was the lowest reading since November 1973.

Dollar bullish investors were on the offensive, according to Lukman Otunuga, an analyst at FXTM, as minutes from the Fed’s 20-21 September committee meeting released on Wednesday reinforced expectations over a rise in interest rates before the end of the year.

“Market participants were provided some clarity after the minutes showed September’s inaction being a ‘close call’ with several members even agreeing that the Fed should raise rates in the near term if US data continued to strengthen.”

With domestic data repeatedly displaying signs of stability and inflation slowing towards the 2% target, it suggests that the Fed would pull the trigger in the coming months.

“Although the overall market reaction was somewhat muted, the minutes have displayed the Federal Reserve’s intentions to raise US rates this year, consequently providing the markets a cushion for the shock beforehand.”

The Fed’s Patrick Harker is to speak on the economic outlook to the World Affairs Council of Philadelphia at 1715 BST followed by Neel Kashkari who is to address the University of Montana at 0200 BST.

Fed chair Janet Yellen is due to speak in Boston on Friday at 1700 BST, with investors hoping she would provide a hint on the direction of the central bank’s policy.

Meanwhile Chinese trade data showed exports fell 10% year-on-year in September, below expectations of a 3% decline, sparking concerns for the world’s second largest economy and global demand as US stocks fell.

Oil prices steadied having fallen after OPEC said September’s oil production rose to its highest level in eight years.

West Texas Intermediate was down 0.04% to $50.16 a barrel and Brent crude was lower by 0.058% to $51.78 at 1517 BST.

On companies, shares in rail shipper CSX Transportation were up 1.752% as it reported better than expected third quarter results.

Shares in Marriott Vacations World Wide plummeted 10.04% after a rise in profits did not meet analyst expectations, whereas Delta Air Lines’ third quarter profit was above analyst expectations which resulted in shares rising 1.17%.