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| U.S. stocks track world markets deeper into the red | U.S. stocks track world markets deeper into the red |
| (35 minutes later) | |
| Trading in U.S. stocks slipped deeper into the red Thursday morning, as equities markets overseas wobbled and investors worldwide worried about declining oil prices and watched for any signals on U.S. interest rates. | |
| Tracking a sell-off in global markets, the Dow Jones industrial average dropped 2.4 percent and the tech-heavy Nasdaq fell 1.6 percent by 11:30 a.m. as Federal Reserve chief Janet Yellen, in the Senate, faced a second day of questions in her semiannual testimony before Congress. | Tracking a sell-off in global markets, the Dow Jones industrial average dropped 2.4 percent and the tech-heavy Nasdaq fell 1.6 percent by 11:30 a.m. as Federal Reserve chief Janet Yellen, in the Senate, faced a second day of questions in her semiannual testimony before Congress. |
| On Wednesday, before the House Financial Services Committee, Yellen reiterated her confidence in the U.S. economy. In a public grilling, 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 to 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 signaled 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. |
| The news out of Yellen’s 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.” | |
| 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 late morning Thursday, oil prices were slumping. Futures for Brent crude oil, the international benchmark, were down 2 percent, indicating pessimism among traders about global demand. In the United States, West Texas Intermediate crude was trading at $26.50 a barrel, or 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. |