US open: Stocks slide amid concerns over rate hike timing

US stocks slid early on Thursday amid growing concerns over the timing of the first Federal Reserve rate hike.

Just after 15:00 BST, the Dow Jones Industrial Average was down 56 points, while the S&P 500 and the Nasdaq were 8 and 26 points lower respectively.

US stocks closed higher on Wednesday, with the Nasdaq Composite closing at a record high, driven higher by a rise in European stocks, which moved north on news that Greece and its creditors might be nearing a deal.

However, on Thursday, Christine Lagarde, the managing director of the International Monetary Fund, warned there was still a lot of work to be done before an agreement could be reached.

“The US market is somewhat sheltered from the fallout in the Eurozone, but while corporate reporting remains thin and the Fed remains tight-lipped, traders are turning to Europe for direction,” said IG’s market analyst David Madden.

John Williams, president of the San Francisco Fed, told the Monetary Authority of Singapore the central bank was likely raise interest rates later in 2015, reiterating what Fed chairwoman Janet Yellen said on Friday.

Speculations over the timing of the first rate hike continued to boost the dollar, which surged to a 12-year high against the yen on Thursday.

The greenback gained 0.40% against the pound but lost 0.19% against the euro, while gold futures climbed 0.11% to $1,187.30.

Housing data impresses

According to the Department of Labour, initial weekly US unemployment claims rose by 7,000 to reach 282,000 over the seven days ended on 23 May, compared with forecasts calling for a reading of 270,000.

“This week’s uptick in initial and continuing claims comes off of historically low levels and labor market separations remain healthy,” Barclays' analysts said in a note.

Meanwhile, US pending home sales reached their highest level in nine years in April after increasing for the fourth consecutive month.

Figures released by the National Association of Realtors showed the index reached a seasonally adjusted 112.4 in April, a 14% increase year-on-year and a 3.4% rise month-on-month, way ahead of expectations calling for a 1% increase.

Mixed earnings on Wall Street

In company news, retailer Costco Wholesale shed 0.86% after reporting earlier on Thursday that its third quarter profit rose, on the back of low gas prices and strong store sales.

Chip maker Broadcom fell 3.86% agreeing to a $37bn cash and stock takeover bid from sector peer Avago Technologies, which will report after the close.

Clothing retailer Abercrombie & Fitch jumped 8.24% despite reporting a wider-than-expected loss during the first quarter.

Oil prices fell, with West Texas Intermediate losing 1.21% to $56.82 a barrel, while Brent fell 0.58% to $61.70 a barrel.