US open: Losses at the bell as interest rate hikes deter investors
Wall Street trading started off with some losses on Thursday as investors were deterred by the prospect of faster interest rate hikes.
As of 1535 BST, the Dow Jones was 0.89% lower at 26,591.36, while the S&P 500 was 0.76% weaker at 2,903.26 and the Nasdaq was 1.31% softer 7,920.36.
Meanwhile, the yield on the 10-year Treasury note hit its highest level since July 2011 on Wednesday and the yield on the 30-year Treasury bond hit its highest level since October 2014 following the release of solid ADP data, a strong reading on the services sector and hawkish comments from Federal Reserve chairman Jerome Powell.
Speaking at an event hosted by The Atlantic magazine and the Aspen Institute, Powell said that a gradual path of interest rate hikes was the best way to move forward but also said America was experiencing "a remarkably positive set of economic circumstances".
Oanda analyst Craig Erlam said': "Powell suggested that the Fed remains 'a long way from neutral at this point' and that they may go beyond which may go against what investors had in mind.
"There appeared to be a belief that in removing the reference to monetary policy being accommodative from the statement last week, that the central bank was near the neutral rate and therefore rate hikes may be more limited but that is clearly not the case. With the economy running hot and headwinds - such as trade wars - not yet weighing, the Fed is clearly very comfortable maintaining the pace of tightening and is willing to go further in order to keep it in check."
In corporate news, the big story was with Amazon and Apple, where shares slipped on a Bloomberg story that claimed the pair were among almost US companies and government agencies who have had data stolen by Chinese spies via tiny microchips, "not much bigger than a grain of rice”, secretly placed into circuitboards assembled in China.
Amazon Web Services, it was reported, was aware of modified hardware or malicious chips in SuperMicro motherboards in Elemental Media’s hardware at the time Amazon acquired Elemental in 2015, and that Amazon was aware of modified hardware or chips in AWS’s China region. Amazon said "this is untrue" and denied having engaged in an investigation with the government, adding that "at no time, past or present, have we ever found any issues relating to modified hardware or malicious chips in SuperMicro motherboards in any Elemental or Amazon systems".
Likewise, Apple said that, having been contacted multiple times by Bloomberg, it has carried out "rigorous internal investigations based on their inquiries and each time we have found absolutely no evidence to support any of them" and said it refuted "virtually every aspect" of Bloomberg’s story relating to Apple.
Elsewhere, Constellation Brands picked up 4.86% and Costco dipped 0.45% in early trading after reporting their earnings.
Nike and P&G were leading the Dow in losses - down 2.56% and 2.07%, respectively.
On the data front, the number of Americans filing for unemployment benefits fell more than expected last week, according to figures from the Labor Department.
US initial jobless claims fell by 8,000 to 207,000 from the previous week's level, which was revised up by 1,000 from 214,000. Economists had been expecting a smaller drop to 213,000.
The Labor Department said claims for South and North Carolina were affected by Hurricane Florence, which hit the region in mid-September.
Elsewhere, US factory orders climbed more than they had in almost twelve months throughout August, according to the Commerce Department.
Factory orders rose 2.3% throughout the month to $510.5bn — the biggest monthly gain since September 2017 - topping analyst expectations of a 2.1% increase.