US open: Wall Street drifts lower ahead of Fed speakers

Shares on Wall Street were drifting slightly lower in late morning trading in New York following the release of a mixed bag of economic data and ahead of a much awaited speech on the economy from Federal Reserve governor Jerome Powell.

The Dow Jones Industrial Average was trading down by 0.13% or 22.94 points at 17,808.57, while Nasdaq futures were off by 0.02% or 1.13 points to 4,893.76 and the S&P 500 slipped 0.05% or 1.12 points to 2,089.42.

Oil prices were off their best levels of the day but nonetheless higher after data from the Energy Information Administration on Wednesday revealed that US crude supplies declined by 4.2m barrels for the week ended 20 May, compared with expectations of a 2.5m drop.

West Texas Intermediate was up 0.22% to $49.67 a barrel while Brent crude was 0.34% firmer at $49.91. In parallel, the US dollar spot index was slipping 0.17% to 95.19.

“The major indices appear to be consolidating following two explosive sessions which have both seen triple digit gains for the Dow. The sharp move higher has taken many investors by surprise given the recent hawkish comments from Fed members which have raised the probabilities of a summer rate hike,” said David Morrison, senior market strategist at SpreadCo.

Morrison said the equity rally was due in part to increased confidence in the US economy and hopes that it is strong enough to withstand further monetary tightening.

“However, all eyes are on the dollar now. If the greenback continues its recent rally this will put pressure on China and increase the possibility of a yuan devaluation. It should also put downside pressure on dollar-denominated commodities. But for now all seems well – particularly with near-month Brent crude back above $50 per barrel.”

Orders for US durable goods rocketed 3.4% month-on-month in April, figures from the Department of Commerce revealed. Yet that was largely due to a 65% surge in orders for civilian aircraft.

So-called 'core' capital goods orders in fact fell by 0.8% (consensus: 0.3%) in comparison to the prior month, a poor omen for business investment.

Similarly, the National Association of Realtors´ pending home sales index jumped by 5.10% month-on-month in April - to reach its highest level since February 2006 - after a rise of 1.4% in March (consensus: 0.60%).

However, at least one well-regarded economist pointed to positive seasonal factors as the main reason behind the large increase seen in the index.

Despite the mixed economic data on offer on Thursday, the Federal Reserve Bank of Atlanta marked up its tracking estimate for second quarter economic growth Stateside from an annualised pace of 2.5% to 2.9%, comfortably above the pick-up that most economists were then expecting.

Fed governor Powell was scheduled to take to the podium at 17:00 BST.