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25 Mar 2021 | 15:26

US open: Stocks head south, Powell comments in focus

(Sharecast News) - Wall Street stocks were in the red early on Thursday as comments from Federal Reserve chairman Jerome Powell weighed on sentiment and traders took a moment to reassess the US economic outlook As of 1525 GMT, the Dow Jones Industrial Average was down 0.61% at 32,221.69, while the S&P 500 was 0.58% weaker at 3,866.72 and the Nasdaq Composite started out the session 1.08% softer at 12,822.01.

The Dow opened 198.37 points lower on Thursday, extending the small loss recorded yesterday after Federal Reserve Chairman Jerome Powell hinted at inevitably removing some of the stimulus measures that had boosted the market amid the pandemic.

Powell said congressional stimulus and accelerated vaccine distribution had afforded the economy the opportunity to bounce back faster than initially anticipated and stated that at some point, that would allow the central bank to begin pulling back on much of the help it had provided.

"As we make substantial further progress toward our goals, we'll gradually roll back the amount of Treasurys and mortgage-backed securities we've bought," said Powell. "We will very gradually over time and with great transparency, when the economy has all but fully recovered, we will be pulling back the support that we provided during emergency times."

In focus in early trading, the yield on the benchmark 10-year Treasury note continued to drop on Thursday, down roughly two basis points at 1.60%, with the yield on track for a fourth straight daily decline after the rate hit a 14-month high last week.

On the macro front, the United States' real gross domestic product expanded at an annual rate of 4.3% in the fourth quarter, according to the Bureau of Economic Analysis, ahead of the previous estimate and market expectation of 4.1% on the back of an upward revision to private inventory investment that was partly offset by a downward revision to nonresidential fixed investment.

Also on investors' minds was news that the number of Americans filing for unemployment benefits had dropped to 684,000 in the week ended 20 March, according to the Labor Department, its lowest since the Covid-19 pandemic annihilated the labour market twelve months ago and well below market expectations of 730,000.

Elsewhere, March's Kansas Fed manufacturing index rose to 26 from 24 in February, bang in line with analyst estimates.

Still to come, market participants were also holding out for comments from President Joe Biden at a formal press conference scheduled for 1715 GMT where he is expected to announce a new Covid-19 vaccine goal of 200.0m shots within his first 100 days in office.
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