Investing.com – Wall Street traded lower on Thursday with experts blaming uncertainty over the fiscal policies to be implemented by President-elect Donald Trump even as market participants digested a wave of remarks from Federal Reserve (Fed) officials.
At 11:48AM ET (16:48GMT), the Dow Jones sank 162 points, or 0.82%, the S&P 500 lost 18 points, or 0.77%, while the tech-heavy Nasdaq Composite traded down 39 points, or 0.77%.
Trump failed to address economic and fiscal policies in his first formal news conference on Wednesday, disappointing market participants who were looking for details on his proposals to boost the U.S. economy with infrastructure spending and tax reforms.
The lack of details was blamed by several analysts for not only Thursday’s downturn in stock markets, but also weakness seen in the dollar.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, hit an intraday low of 100.80 on Thursday, the weakest level since December 14.
Gold also benefited from the flight to safety, hovering around $1,200, after hitting a seven-week high.
Markets also observed a wave of comments from several Fed policymakers on Thursday with an overall dovish tone.
Chicago Fed president Charles Evans, known for being one of the most dovish members of the Federal Open Market Committee (FOMC) that votes on policy decisions, warned of a “global environment with weak international growth and tremendous uncertainties”, although he felt that the Fed call for three rate hikes this year was “plausible”.
Still, though Evans did not directly reference future Trump policies, he warned that U.S. growth could remain stunted unless the labor force or productivity were to grow unexpectedly.
St. Louis Fed president James Bullard, who is no longer on the voting committee this year, stuck to his forecast for just one rate hike this year as he insisted that any new economic policies would impact the economy more in 2018.
Bullard told CNBC in an interview that there was no reason to dramatically move rates now.
“You can afford to be patient here and see what happens and see how much really transpires,” he said
Dennis Lockhart, head of the Atlanta Fed who is stepping down on February 28, suggested that businesses in his region are optimistic over future fiscal measures to improve growth, but noted if inflation overshot the Fed’s target too much, there could be reason to hike rates in a “preemptive way”.
Philadelphia Fed president Patrick Harker, who rotates into the FOMC this year and was dubbed by Deutsche Bank as the only hawk on the committee, kept his view that the U.S. central bank should hike three times this year, but did pass the baton over to the Trump administration, saying that legislative action was required to improve the labor force participation rate and workforce development.
Harker commented that he would need to see a bill before Congress before he could incorporate fiscal changes into his outlook.
In a hawkish comment though, Harker said that the Fed would need to examine their reinvestment bond-buying policy when interest rates hit 1%.
On the data front, there were continuing signs of strength in the labor market with weekly initial jobless claims rising less than expected and continuing claims unexpectedly falling.
Additionally, import prices rose by only 0.4% in December, missing expectations for a gain of 0.7%, as a stronger dollar kept inflation in check. Export prices rose by 0.3%, higher than the consensus forecast of a 0.1% gain.
Meanwhile, oil prices rose sharply on Thursday, with traders encouraged by signs that major crude producers will adhere to their pledge to curb output.
U.S. crude futures gained 1.57% to $53.07 by 11:49AM ET (16:49GMT), while Brent oil traded up 1.85% to $56.12.
In company news, Apple (NASDAQ:AAPL) made headlines on a report that said the tech firm was planning to move into production of its own television and movie content.
In other blue-chip rumors, McDonald’s (NYSE:MCD) was reported to be studying the sale of a significant stake in its Japanese unit, with the move coming just after a similar divestment in China.
Amazon.com (NASDAQ:AMZN) also captured headlines after announcing plans to increase its workforce by 100,000 people.
U.S. shares of Fiat Chrysler (NYSE:FCAU) slumped more than 13% Thursday as the Environmental Protection Agency accused the automaker of manipulating emissions software, in allegations reminiscent of a similar scandal with Volkswagen (DE:VOWG_p) that ended in a $4.3 billion settlement.