US open: Wall Street set for dip, despite tax reform and Fed news
Stocks have started the session lower with investors reacting poorly to the latest quarterly updates out of Facebook and Tesla overnight and ahead of Friday's all-important monthly US jobs report.
The muted start to trading on Thursday was also despite leaks of Republicans' tax reform plans and 'market chatter' that the White House was set to name current Federal Reserve governor Jerome Powell in the place of Janet Yellen next March.
Against that backdrop, as of 1413 GMT, the Dow Jones Industrial Average was down by 0.24% or 56.93 points at 23,378, alongside a 0.36% or 9.39 point fall in the S&P 500 to 2,570 and a 0.31% or 20.28 point dip in the Nasdaq Composite to 6,696.
From a sector standpoint, the weakest segments of the market were: Durable hosuehold products (-7.19%), Furnishings (-3.20%) and Home construction (-3.09%).
Traders yawn amid reports Powell to succeed Yellen as Fed chair
Where news of Powell's likely nomination was being felt was in the Treasury market, where the yield on the benchmark 10-year US Treasury note was trading lower by three basis points at 2.34%. Banks were lower in tandem with the KBW sector index down 0.66% to 101.02.
According to Kathleen Brooks, research director at City Index, Powell was the "continuity choice" although he was seen as "soft" on financial market regulation.
Brooks also pointed out that the position of Fed vice chair had yet to be filled as were four other seats in the central bank's top echelons. Hence, there was still room for surprises on that front, she surmised.
"The prospect of tax reform has been discounted by the markets over recent months anyways, which is another reason why Powell and his regulatory stance could be the next main driver of US banks in the coming months.
"[...] Overall, we expect the Powell nomination to be taken in the market’s stride, but as we mention above, it is the other positions (spefically, John Taylor as Fed vicechair) that could really shake things up at the Fed, so we wait and see who is next to be nominated to the board," she said.
On the economic front, according to the Journal US House Republicans would propose a permanent reduction in the corporate tax rate from 35% to 20% and a reduction in the number of individual income tax brackets - and a repeal on taxes paid by large estates.
Meanwhile, the Department of Labor reported a 3.0% in non-farm labour productivity during the third quarter (consensus:1.9%).
The drop in weekly jobless claims also exceeded economists' forecasts, dropping by 5,000 to reach 229,000 (Barclays: 240,000).
In corporate news, shares of electric car maker Tesla was down after it posted a bigger-than-expected loss late on Wednesday, while Facebook was also in the red despite better-than-expected quarterly earnings late on Wednesday.
Qualcomm on the other hand was higher despite the chip designer reporting a near-90% drop in fourth-quarter profit.
Elsewhere, Yum Brands was also in the red in the wake of its third-quarter numbers, the same as DowDuPont after the company announced job cuts as part of a cost-cutting plan although it did post third-quarter profit and sales ahead of analysts' expectations.
Apple and Starbucks would report after markets closed.