Investing.com – Wall Street traded lower on Thursday, though tech shares were marginally lower, as markets show skepticism over a preliminary OPEC agreement to reach a deal on a production cut and hawkish comments from Federal Reserve (Fed) officials pushed up the odds of a rate hike in December.
At 11:51AM ET (15:51GMT), the Dow Jones fell 41 points, or 0.23%, while the S&P 500 dropped 5 points, or 0.22%, and the tech-heavy Nasdaq Composite traded down 25 points, or 0.47%.
Despite the fact that the OPEC outlined a deal for what would be the first oil production cut since 2008, most experts were skeptical over the lack of details and its potential to have a material impact on oil prices.
Analysts pointed to the fact that potential agreement, scheduled for the official OPEC meeting on November 30, would take two months to arrive and that the cartel had a poor historic record of complying with quotas.
They further warned that the deal would not resolve the current global supply glut in the short-term and any rise in prices would only incentivize production increases in other parts of the world.
After spiking more than 5% on the news of the framework for an agreement in the prior session, oil prices underwent choppy trade on Thursday.
Though oil traded down European trading, it had recovered by midday trading stateside on comments from the Russian energy minister Alexander Novak that Moscow would consider proposals from OPEC for joint action on the oil market and would hold consultations with the group in October and November.
U.S. crude oil futures jumped 1.66% to $47.83 by 11:52AM ET (15:52GMT), while Brent oil rose 1.48% to $49.97.
Meanwhile, some hawkish remarks from Fed officials caused markets to tick up the odds on a December rate hike to 61.7%, from 57.4% the previous day, according to Investing.com's Fed Rate Monitor Tool.
Philadelphia Fed president Patrick Harker said Thursday that, given the economic improvement in the U.S., the central bank could do nothing more to foster growth and urged fiscal and other policies to take the reins.
In the posterior Q&A, Harker said that while a rate hike in November was still on the table, if the economy continued to run at current pace, he felt December would be appropriate to normalized monetary policy.
Kansas City Fed president Esther George, who was one of the policymakers who dissented at the last meeting based on her preference for a rate hike, repeated her call for policy tightening both a day earlier and in an interview with CNBC on Thursday. She was also expected to speak later at 4:00PM ET (20:00GMT) on challenges for the banking industry.
Atlanta Fed president Dennis Lockhart showed a slightly less hawkish view, stating that he would like to see more evidence of improvement before making a move. Still, Lockhart said he expected the Fed to hike “before long”.
Fed governor Jerome Powell said he thought the economy was in good shape and that rate increases would depend on continued solid performance. He added that the Fed can be patient.
Minneapolis Fed chief Neel Kashkari will host a town hall discussion Thursday at 2:00PM ET (18:00GMT). A day earlier, Kashkari commented that he believed the economy still had room to run as the healthy clip of job creation was not resulting in inflationary pressure, while George repeated her call for a near-term rate hike to normalize policy.
There is also an appearance Thursday by Fed chair Janet Yellen, who is due to speak via videoconference at the Minority Bankers Forum in Kansas City at 4:00PM ET (20:00GMT).
In testimony to the House of Representatives’ Financial Service Committee a day earlier, Yellen indicated that if job creation continued at its current pace it could lead to overheating of the American economy which in turn would require a more rapid removal of accommodative monetary policy.
On the data front, second-quarter GDP beat expectations with a larger-than-expected upward revision to 1.4%, while weekly jobless claims registered a smaller-than-expected increase.
Additionally, the goods trade deficit unexpectedly shrank to $58.4 billion in August.
On the downside, pending home sales unexpectedly dropped to its lowest level since January, though NAR chief economist Lawrence Yun pointed out that this was more due to a lack of construction of new homes rather than low confidence.
In big moves on earnings, ConAgra Foods (NYSE:CAG) jumped almost 8% after adjusted earnings-per-share (EPS) of $0.61 blew past consensus by 13 cents.
Accenture plc (NYSE:ACN) and PepsiCo (NYSE:PEP) gained 6% and 1%, respectively, after their own earnings report.
Costco (NASDAQ:COST) will publish after the market close.
Meanwhile, Apple (NASDAQ:AAPL) pulled markets lower, dropping more than 1%, after Barclays removed it from its “Top pick” list due to the recent gains in its shares and concern that the global recovery in smartphones could be prolonged.
Shares of CBS Corp (N:CBS) and Viacom Inc (O:VIAB benefitted from National Amusements ‘ call for a merger of the two companies.