US close: Dow down as Donald slump follows scattergun speech
US stocks dipped lower on Thursday as investors struggled with a slew of speeches by Federal Reserve officials, a scattergun speech by Donald Trump and disappointing jobs data.
The Dow Jones Industrial Average closed down 0.32% to 19,891, while the S&P 500 gave up 0.21% to 2,270.44 and the Nasdaq Composite edged 0.29% lower to 5,547.49.
"Far from being the catalyst for the next leg higher in the ‘Trump rally’, The Donald’s press conference seems to have called a temporary top," said Jasper Lawler at London Capital Group, as the emphasis of the President-elect's surreal presser was knocked off course by an unsubstantiated intelligence dossier.
"Markets were waiting for 'pro-growth' Trump and they got 'fake news' Trump. Stocks markets were mostly lower while traditional havens like gold and the Japanese yen rose in response," Lawler added.
Michael Hewson at CMC Markets in London said the dip came as investors digested the fact that their impending President’s propensity to shoot from the hip is likely to add a healthy dash of continued political uncertainty to the markets.
"Investors don’t appear to have factored this into their investment scenarios given the gains seen since November 8th and last night’s events may well be the wakeup call many of them needed to start doing so. The Trump Presidency is unlikely to be a one way bet for stock markets," Hewson said.
Meanwhile, oil prices advanced after Saudi Arabia cut production to less than 10m barrels per day, more than the agreed OPEC-led cull.
West Texas Intermediate was up 1.5% to just over $53 a barrel and Brent crude gained 1.8% to a little above $56.
In currency markets, the dollar weakened against the euro to 0.9419 and sterling to 1.2169, as well as declining even more sharply against the haven of the yen to 114.61.
Of the Fed speakers, Philadelphia President Patrick Harker was the first to speak. He said that the domestic economy was gathering strength and predicted three further interest rate hikes for the year ahead.
Harker said Trump’s proposed stimulus policies “could cut both ways” and that it was too soon to change forecasts on the economy or monetary policy.
The Chicago Fed's Charles Evans later said aggressive fiscal and other policies, as mooted by Trump, would only push domestic economic growth to 4% in the short run, merely sparking inflation unless they were accompanied by strategies to boost productivity or expand the labor market, "it is not possible to just birth a large cohort of 25-year-olds.".
St Louis Fed President James Bullard, in an interview with CNBC, said that with inflation low, the the Fed could "afford to be patient and here and see what happens" with the new administration without losing monetary policy control.
But Atlanta Fed head Dennis Lockhart warned if inflation jumped the Fed may be forced into "preemptive" rate increases.
Finally, Fed chair Janet Yellen has a town hall meeting with teachers in Washington at midnight London time.
On the data front, initial jobless claims were up 10,000 to 247,000 from the previous week’s level, which was revised up by 2,000. Economists had been expecting a bigger jump to 255,000. This marked the 97th consecutive week of initial claims below 300,000 – the longest streak since 1970.
The four-week moving average came in at 256,500, down 1,750 from the previous week’s average, which was revised up from 256,750 to 258,250.
While import priced rose 0.4% in December, after an upwardly 0.2% revised fall in November. Economists expected a 0.7% rise after an initially reported 0.3% drop.
Export prices increased 0.3% in December after a 0.1% slip the previous month. They were up 1.1% from a year ago.
In corporate news, Applied Optoelectronics soared after its fourth-quarter results came in well above prior guidance overnight.
Amazon was higher after the online retail giant said it would create 100,000 full-time jobs by mid-2018.
Campbell Soup was among leading gainers in the S&P 500, while energy firm Hess Corp fell 6.4% leading S&P’s laggards, even though oil prices rose.
Apple was lower as US appeals court revived an antitrust lawsuit against the tech giant, opening the door to iPhone app purchasers to sue Apple over allegations that the company monopolized the market for iPhone apps by not allowing users to purchase them outside the App Store.
There were also reports Apple was gearing up to take its first step towards competing with the likes of Netflix and Amazon in the online entertainment sector, with a plan to introduce its own original television shows and movies.
Disney was the biggest faller in the Dow as it was given a 'sell' rating by Pivotal Research, which downloaded the media giant, along with Twitter, CBS and several other media and technology companies, over political risks linked to Donald Trump's looming inauguration and administration.
Dow Jones - Risers
McDonald's Corp. (MCD) $122.10 1.01%
Merck & Co. Inc. (MRK) $62.21 0.94%
Verizon Communications Inc. (VZ) $52.68 0.42%
Unitedhealth Group Inc. (UNH) $162.36 0.29%
Chevron Corp. (CVX) $116.16 0.20%
International Business Machines Corp. (IBM) $167.95 0.12%
E.I. du Pont de Nemours and Co. (DD) $74.11 0.11%
Procter & Gamble Co. (PG) $83.84 0.11%
American Express Co. (AXP) $76.88 -0.04%
Johnson & Johnson (JNJ) $114.60 -0.10%
Dow Jones - Fallers
Walt Disney Co. (DIS) $107.53 -1.75%
JP Morgan Chase & Co. (JPM) $86.24 -0.96%
Microsoft Corp. (MSFT) $62.61 -0.92%
Wal-Mart Stores Inc. (WMT) $67.97 -0.82%
Goldman Sachs Group Inc. (GS) $243.84 -0.78%
Travelers Company Inc. (TRV) $116.75 -0.76%
Pfizer Inc. (PFE) $32.59 -0.70%
Caterpillar Inc. (CAT) $93.99 -0.70%
Boeing Co. (BA) $158.29 -0.70%
Intel Corp. (INTC) $36.71 -0.65%
S&P 500 - Risers
Tiffany & Co. (TIF) $80.55 3.61%
Alcoa Corporation (AA) $33.04 3.35%
Amerisource Bergen Corp. (ABC) $83.86 2.86%
Discovery Communications Inc. Class A (DISCA) $27.20 2.60%
Discovery Communications Inc. Class C (DISCK) $26.65 2.54%
Eli Lilly and Company (LLY) $77.15 2.51%
Campbell Soup Co. (CPB) $61.57 2.36%
Mallinckrodt Plc Ordinary Shares (MNK) $51.62 2.34%
NRG Energy Inc. (NRG) $14.38 1.99%
Best Buy Co. Inc. (BBY) $44.23 1.87%
S&P 500 - Fallers
United States Steel Corp. (X) $32.82 -6.76%
Cincinnati Financial Corp. (CINF) $69.91 -6.65%
Hess Corp. (HES) $58.75 -4.84%
Freeport-McMoRan Inc (FCX) $15.27 -3.78%
PNC Financial Services Group (PNC) $118.03 -2.80%
Cimarex Energy Co (XEC) $138.84 -2.55%
United Rentals Inc. (URI) $106.53 -2.49%
Frontier Communications Co. (FTR) $3.53 -2.22%
Zions Bancorporation (ZION) $42.97 -2.16%
Prudential Fincl Inc. (PRU) $104.22 -2.13%