US open: Stocks open lower as investors mull over latest Fed policy statement

Trading on Wall Street began with losses across the board on Thursday, following on from those seen in the previous session, as investors continued to mull over the Federal Reserve's latest policy statement.

At 1520 BST, the Dow Jones Industrial Average was down 0.95%, while the Nasdaq and S&P 500 were falling by 0.67% and 0.82%, respectively.

On Wednesday, the Fed stood pat on rates as expected but pointed to the fact that inflation is beginning to edge higher. In addition, the central bank made a number of tweaks to its accompanying statement. At the March meeting, it had said that inflation indicators "have continued to run below 2%", but in the latest statement, the Fed said, "overall inflation and inflation for items other than food and energy have moved close to 2%".

The Committee also said that inflation on a 12-month basis is expected to run near its "symmetric 2% objective over the medium term", with the use of the word "symmetric" grabbing investors' attention.

Rabobank said: "The statement incorporated only minor changes, yet the emphasis on the symmetric inflation goal signals that the FOMC won’t be too worried about a slight but temporary overshoot. This suggests that the FOMC might see the need for some wiggle room later this year."

Meanwhile, Daiwa Capital Markets said it does not view this as a signal that officials are rethinking the policy path indicated by the March forecasts of three or four tightening moves this year.

"We viewed the addition of 'symmetric' as a signal that 2% is a target and not a ceiling; this level can be breached if policymakers are confident that inflation is not accelerating and likely to deviate meaningfully for an extended period. But with the economy at full employment, and with inflation starting to move upward, and with monetary policy still viewed as accommodative, we see the Fed as proceeding with normalisation."

In corporate news, electric car maker Tesla was down 6.15% even after its latest quarterly earnings, released late on Wednesday, beat expectations.

Chief executive Elon Musk kicked up a storm in a conference call with analysts to discuss the results, after saying investors should sell his stock, not buy it and expressed annoyance with some of the analysts.

He responded to questions from an RBC Capital Markets analyst by saying: "These questions are so dry. They're killing me."

Musk also said during the call: "Really, the problem is like people get too focused on like what's happening in the space of a few weeks or a few months...You should be focused on long-term things.

"We have no interest in satisfying the desires of day traders, like, we couldn't care less. Please sell our stock and don't buy it."

Elsewhere, Kraft Heinz shares were up 3.27% after its earnings late on Wednesday came in ahead of expectations, while security software maker FireEye lost 5.26% despite having lifted its full-year guidance.

Spotify on the other hand was down 9.47% after its earnings debut missed a beat and Fitbit shares were off by 7.38% after reporting weak tracker sales that hurt its second-quarter revenue.

DowDuPont was up 0.57% after sales rose 5% on an increased demand and Cigna was down 1.40% after the group saw profits jump amid scepticism about its Express Scripts deal.

Kellogg was up 3.54% as consumers continued to embrace healthy eating and Blue Apron collected 3.09% after adding a slew of new customers throughout the quarter.

Herbalife Nutrition, Activision, Xerox, GoPro and Blizzard will release their quarterly earnings after the close.

On the data front, the US trade gap narrowed 15.2% in March to a seasonally adjusted $48.96bn, the Commerce Department said Thursday.

The decline was the largest one-month drop for the trade deficit since 2016 years, taking it to its lowest level since September.

Economists had expected a much larger March deficit of $56.0bn

Elsewhere, new applications for US jobless benefits increased less than expected last week, increasing by 2,000 to a seasonally adjusted 211,000 for the week ended April 28, the Labor Department said on Thursday. Claims had dropped to 209,000 the week before, marking the lowest level since December 1969.

In parallel, the four-week moving average of initial claims fell by 7,750 to 221,500.

In other data, America's final Markit services PMI reading for April came in at 54.6, versus an expected readout of 54.5, and the ISM non-manufacturing PMI fell to a four-month low in April to a reading of 56.8%, down from 58.8% in March.