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| U.S. stocks track world markets deeper into the red | |
| (35 minutes later) | |
| Trading in U.S. stocks slipped deeper in the red Thursday morning, as equities markets overseas wobbled and investors worldwide worried about declining oil prices and a possible increase in U.S. interest rates. | |
| The Dow Jones industrial average was off 2.1 percent and the tech-heavy Nasdaq down 1.4 percent in early trading. | |
| On Wall Street, investors had initially bid up prices of equities Wednesday but lost their enthusiasm late in the afternoon, and the Standard & Poor’s 500-stock index closed unchanged. That index dropped 1.6 percent after the opening bell. | On Wall Street, investors had initially bid up prices of equities Wednesday but lost their enthusiasm late in the afternoon, and the Standard & Poor’s 500-stock index closed unchanged. That index dropped 1.6 percent after the opening bell. |
| In her semiannual congressional testimony Wednesday, Federal Reserve chief Janet Yellen reiterated her confidence in the U.S. economy. In a public grilling of the central bank’s leader, lawmakers questioned whether the Fed had acted prematurely in increasing its benchmark interest rate in December — the first move from zero since the Great Recession. Yellen emphasized that she didn’t expect the Fed would cut rates anytime soon. | In her semiannual congressional testimony Wednesday, Federal Reserve chief Janet Yellen reiterated her confidence in the U.S. economy. In a public grilling of the central bank’s leader, lawmakers questioned whether the Fed had acted prematurely in increasing its benchmark interest rate in December — the first move from zero since the Great Recession. Yellen emphasized that she didn’t expect the Fed would cut rates anytime soon. |
| “I think we want to be careful not to jump to a premature conclusion about what is in store for the U.S. economy,” Yellen said. | “I think we want to be careful not to jump to a premature conclusion about what is in store for the U.S. economy,” Yellen said. |
| She acknowledged that weakness abroad, especially in China, could pose a risk to the U.S. economy. Yet she also argued that the low rate of unemployment and encouraging data from the auto and residential construction sectors indicate strength in the domestic economy. | She acknowledged that weakness abroad, especially in China, could pose a risk to the U.S. economy. Yet she also argued that the low rate of unemployment and encouraging data from the auto and residential construction sectors indicate strength in the domestic economy. |
| [Lawmakers grill Fed chief in testy hearing on Capitol Hill] | [Lawmakers grill Fed chief in testy hearing on Capitol Hill] |
| Investors, though, seem pessimistic. Doubt has emerged over whether the economy will be robust enough to warrant additional increases in the interest rate that Yellen and her colleagues had previously signalled were possible this year. | Investors, though, seem pessimistic. Doubt has emerged over whether the economy will be robust enough to warrant additional increases in the interest rate that Yellen and her colleagues had previously signalled were possible this year. |
| The probability of another rate increase before year’s end has plummeted to just 12 percent, as implied by the hedges that investors are buying against inflation and changing rates. Last week, that figure was above 46 percent. | The probability of another rate increase before year’s end has plummeted to just 12 percent, as implied by the hedges that investors are buying against inflation and changing rates. Last week, that figure was above 46 percent. |
| Yellen is due to testify again, this time before the Senate, on Thursday. | Yellen is due to testify again, this time before the Senate, on Thursday. |
| The news out of her first round of testimony failed to calm jitters overseas. Tokyo’s Nikkei 225 declined 2.3 percent Thursday — and is off 17 percent for the year. Hong Kong’s Hang Seng Index fell 3.85 percent. Euro Stoxx 50 was down 2.6 percent. In London, the Financial Times Stock Exchange 100 index was trading 1.7 percent below Wednesday’s close. | The news out of her first round of testimony failed to calm jitters overseas. Tokyo’s Nikkei 225 declined 2.3 percent Thursday — and is off 17 percent for the year. Hong Kong’s Hang Seng Index fell 3.85 percent. Euro Stoxx 50 was down 2.6 percent. In London, the Financial Times Stock Exchange 100 index was trading 1.7 percent below Wednesday’s close. |
| “We’re far from seeing a turnaround in bearish sentiment and I think this will dominate markets for a while longer,” said Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank in Bonn, Germany, according to Bloomberg. “People were looking for catalysts to trigger a lasting rebound, but so far nothing has worked — not earnings season, economic data, central banks or very cheap valuations. Everyone is so nervous.” | “We’re far from seeing a turnaround in bearish sentiment and I think this will dominate markets for a while longer,” said Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank in Bonn, Germany, according to Bloomberg. “People were looking for catalysts to trigger a lasting rebound, but so far nothing has worked — not earnings season, economic data, central banks or very cheap valuations. Everyone is so nervous.” |
| Since the beginning of the year, the Chicago Board Options Exchange Volatility Index has increased 44 percent, reflecting the fact that investors are trading in large volumes and are deeply uncertain about the direction of prices. | Since the beginning of the year, the Chicago Board Options Exchange Volatility Index has increased 44 percent, reflecting the fact that investors are trading in large volumes and are deeply uncertain about the direction of prices. |
| [Feeling a little jumpy about the markets? Here’s what’s going on.] | [Feeling a little jumpy about the markets? Here’s what’s going on.] |
| By midmorning Thursday, oil prices had rallied. Futures for Brent crude oil, the international benchmark, were up 0.4 percent, indicating optimism among traders about global demand. In the United States, West Texas International crude was trading below $27 a barrel. about 3.5 percent below Wednesday’s close. | |
| Earlier in the day, however, traders bid that benchmark down to within pennies of the cheapest price recorded in the past year, which was $26.19 a barrel on Jan. 20. | Earlier in the day, however, traders bid that benchmark down to within pennies of the cheapest price recorded in the past year, which was $26.19 a barrel on Jan. 20. |