S&P, Nasdaq, Dow Jones see choppy trading amid hawkish central bank signals

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Wall Street saw choppy trading on Thursday, with the major U.S. equity averages spending time on either side of the unchanged mark. By the early afternoon, stocks had once again pushed into positive territory.

Trading took place against the backdrop of an ECB rate hike and more hawkish rhetoric from Federal Reserve Chair Jerome Powell. Meanwhile, investors are looking for direction after a rally on Wednesday allowed the Nasdaq to break a seven-session losing streak.

The Nasdaq Composite (COMP.IND) +0.1%, the S&P 500 (SP500) +0.5%, and the Dow (DJI) +0.4%.

The ECB raised its key rate by 75 basis points, which was largely expected by the market. However, there was some speculation that doves could make a late push for a smaller increase. The ECB is still predicting economic growth in the single-currency area, not a recession.

“A 75bps hike from the ECB,” T.S. Lombard’s Dario Perkins tweeted. “Unimaginable 12 months ago. Think about what this means. Either we are in a totally new world, or central banks are losing their (minds) over nothing.”

The 10-year Treasury yield (US10Y) is up 3 basis points to 3.29% and the 2-year yield (US2Y) is up 5 basis points at 3.50%.

Making remarks at a Cato Institute Q&A, Fed chief Powell remained hawkish, stating, “very much (in) my view we need to act forthrightly, strongly on inflation” and that the central bank needs “to keep going until we get the job done.” Powell also added that “history cautions against prematurely loosening policy.”

Turning to economic news, weekly jobless claims are still showing strength, falling unexpectedly to 222K.

Among active issues, Regeneron is the top gainer in the S&P on positive results for its blockbuster eye medication. McCormick is the biggest decliner following a cut in guidance.