Loretta Mester, president of the Federal Reserve Bank of Cleveland, said the Fed needs to raise rates above 5% and maintain them there for a while, but also remarked that the rate-hike journey is nearing its conclusion.

Cues From Thursday's Trading:

All major equity indices traded lower for the day, with the S&P 500 index down 0.3%, the Nasdaq 100 down 0.1% and the Dow Jones Industrial Average down 0.2%. Small caps in the Russell 2000 index underperformed, down 0.4%. 

Analyst Color:

"While there have been individual earnings movers (such as Tesla) so far this season, the overall market has had little overall reaction to companies’ results," Zacks said.

The Fed's next meeting in May could mark an inflection point, the Moomoo strategist said. 

"If it is the last time the Fed hikes rates, the real question will be whether it will quickly reverse course or hold policy steady for a longer period, something market participants are currently split on," he said. 

"Technically in 2023, the S&P 500 has broadly traded in a channel between 3,800 and 4,200. With the 10-year note down over 35 basis points this year, the S&P 500 is approaching that upper bound of 4,200. A break of either side of this channel may determine the market’s trajectory in the months to come."

Quincy Crosby, chief global strategist for LPL Financial, said the dramatic short positioning in the market, based on the widely followed Commitment of Traders, is the most since 2011. Bulls believe this will provide a tremendous source of momentum at the right time when the S&P 500 makes its move decidedly higher, he said.

“The market is clearly in waiting mode, with the shorts ready to move instantaneously with an abundance of liquidity; the kind contrarians love to see,” Crosby said. The analyst said the focus will be on corporate guidance this earnings season.

“For the bulls, it is crucial to have more S&P 500 names cross their 200-day moving averages in order to convert the bears who cling to the long list of economic considerations, including the debt ceiling challenges.”

Thursday's Trading In Major US Equity ETFs: 

Latest Economic Data:

The Labor Department reported an increase of 5,000 to 245,000 in jobless claims for the week ending April 15.

Philadelphia Fed’s manufacturing index plummeted to -31.3 in April, the lowest since May 2020, and well below the expected -20 and the March reading of -23.2. 

The National Association Of Realtors reported a drop of 2.4% in existing home sales in March, after a rise of 13.8% in February. Sales of existing homes fell to 4.44 million units in March versus an expected 4.5 million.

The Conference Board released its leading indicators index indicating a drop of 1.2% in March, worse than the expected 0.8% fall. 

Fed Governor Michelle Bowman is due to speak at 3 p.m. EDT.

See also: Best Futures Trading Software

Stocks In Focus:

Top Analyst Calls

Commodities, Bonds, Forex And Other Global Equity Markets:

Crude oil fell 1.6%, with a barrel of WTI-grade crude trading at $77.70. The United States Oil Fund ETF (NYSE:USO) fell 1.6% to $68.17 per share.  

Treasury yields lowered following the dismal economic data, with the 10-year yield down 7bps to 3.53% and the two-year yield also down 7bps to 4.17%. The iShares 20+ Year Treasury Bond ETF (NYSE:TLT) edged 1% higher. 

European equity indices closed in the red. The iShares MSCI Eurozone ETF (NYSE:EZU) was 0.2% lower.  

Staff writer Piero Cingari updated this report midday Thursday.  

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