Dipo Olowookere
By Investors Hub
The major U.S. index futures are pointing to a roughly flat opening on Thursday following the sharp pullback seen over the course of the two previous sessions.
Traders may be reluctant to make significant moves ahead of Federal Reserve Chairman Jerome Powell?s second day of testimony on Capitol Hill.
Powell is due to appear before the Senate Banking Committee after his remarks before the House Financial Services Committee on Tuesday sparked fears the Fed may raise interest rates more than previously estimated.
With Powell?s prepared remarks likely to mirror those he delivered before the House committee, traders are likely to focus on the question-and-answer segment for clues about the outlook for rates.
After moving to the upside early in the session, stocks fluctuated over the course of the trading day on Wednesday. The major averages bounced back and forth across the unchanged line before closing firmly in negative territory for the second straight day.
The major averages accelerated to the downside going into the close, ending the session at their worst levels of the day. The Dow plunged 380.83 points or 1.5 percent to 25,029.20, the Nasdaq slumped 57.35 points or 0.8 percent to 7,273.01 and the S&P 500 tumbled 30.45 points or 1.1 percent to 2,713.83.
The volatility on Wall Street came as traders expressed uncertainty about the outlook for interest rates after new Federal Reserve Chairman Jerome Powell seemed to suggest that the Fed may raise rates more than the three times currently anticipated.
During testimony before the House Financial Services Committee on Tuesday, Powell noted that incoming data has indicated a strengthening in the economy since the median forecast called for three rate hikes at the December meeting.
Powell stressed that he did not want to prejudge the new set of projections, but his comments still raised concerns about four rate increases this year.
A disappointing batch of economic data may have partly offset the interest rate concerns early in the session, with a report from the Commerce Department showing slightly slower than previously estimated economic growth in the fourth quarter.
The Commerce Department said gross domestic product climbed by 2.5 percent in the fourth quarter compared to the previously estimated 2.6 percent increase. The downward revision to GDP growth matched economist estimates.
A separate report from the National Association of Realtors unexpectedly showed a steep drop in pending home sales in the month of January.
NAR said its pending home sales index tumbled by 4.7 percent to 104.6 in January from a downwardly revised 109.8 in December. Economists had expected pending home sales to rise by 0.3 percent.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
With the unexpected decrease, the pending home sales index slumped to its lowest level since hitting 104.1 in October of 2014.
MNI Indicators also released a report showing a bigger than expected slowdown in the pace of growth in Chicago-area business activity in the month of January.
Oil service stocks showed a substantial move to the downside on the day, dragging the Philadelphia Oil Service Index down by 3.6 percent. The weakness among oil service stocks came amid a steep drop by the price of crude oil.
Significant weakness was also visible elsewhere in the energy sector, with the NYSE Arca Natural Gas Index and the NYSE Arca Oil Index slumping by 2.5 percent and 2.3 percent, respectively.
Biotechnology, chemical, and housing stocks also saw notable weakness on the day, moving lower along with most of the other major sectors.
