US open: Stocks fall as OPEC deal enthusiasm fades

At 1508 BST the Dow Jones Industrial Average dipped 0.02% to 18,338.59 BST, the S&P 500 shed 0.08% to 2,169.231 points and the Nasdaq declined 0.38% to 5,298.16.

At the same time oil prices wavered after OPEC ministers agreed during a meeting in Algeria on Wednesday to cut production to between 32.5m and 33m barrels a day, down from August output levels of 33.5m barrels. Further details of the agreement will be discussed at the next meeting on 30 November.

West Texas Intermediate crude rose 0.2% to $47.16 per barrel and Brent fell 0.14% to $48.62 per barrel.

Ranko Berich, head of market analysis at Monex Europe, said: “OPEC’s agreement to cut production came as a complete surprise to markets last night, but it’s interesting that Brent has failed to breach the $50/barrel level that has acted as resistance in recent months.

“It’s also worth noting that USD, which was influenced heavily by the initial 2014 falls in crude oil prices, did not weaken noticeably on yesterday’s events. It appears that market participants remain sceptical of OPEC’s mettle, and if the cuts announced will be sufficient to clear the current supply glut in crude.”

On the data front, US gross domestic product rose an annual seasonally adjusted 1.4% in the second quarter, the Commerce Department said in its final estimate, up from August’s forecast of 1.1% growth. Economists had expected a 1.3% increase.

“With the data confirming continued progress for the US, one would expect expectations of a rate hike to rise in line with the improving economy,” said Tom Floyd, senior sales trader at Foenix Partners.

“However, with the next Fed meeting due in November, the same month as the US election, a hike then would be surprising (despite the Fed’s supposed non-partisan remit) with a rise most likely to occur in December at the earliest.”

Separately, initial jobless claims rose by 3,000 to a seasonally adjusted 254,000 in the week ended 24 September, the Labor Department said. Economists had pencilled in 260,000 claims.

US pending home sales dropped 2.4% in August compared to a month ago following a 1.2% increase in July, the National Association of Realtors said. Analysts had expected no change.

Meanwhile, Atlanta Federal Reserve President Dennis Lockhart said he expected the central bank would raise interest rates "before long". In a speech in Florida, Lockhart added that he supported the Fed’s decision last week to leave interest rates unchanged until the economy shows further evidence of improvement.

A another event in Dublin, Philadelphia Fed President Patrick Harker said it was time for other policy areas to do their bit to encourage growth as the Fed has already played a large part.

"The American economy has reached a point where monetary policy has done what it can," he said.

"As everyone in this room knows, the reach and arsenal of monetary policymakers is limited... Addressing issues of unemployment from the decline in American manufacturing requires fiscal policy and legislative action."

Fed governor Jerome Powell and Fed President Neel Kashkari were also due to speak on Thursday.

Fed chair Janet Yellen addresses a minority banking conference via video link at 2100 BST, a day after her testimony before the House Financial Services Committee.

In corporate news, PepsiCo shares gained after the softdrink giant raised its earnings forecast for the year and reported a surprise increase in core profit in third quarter.

ConAgra Foods rallied as it reported quarterly profit that exceeded analysts’ expectations.

Costco is due to report its earnings after the close.

Progress Software fell sharply after its third-quarter sales and earnings released late on Wednesday missed analysts’ expectations.

Pier 1 was higher after it reported a second-quarter loss that wasn’t as bad as analysts had expected.