U.S. Stocks Give Back Ground After Early Advance But Remain Mostly Positive

Stocks moved mostly higher in early trading on Thursday but have given back ground over the course of the session. The major averages have pulled back well off their highs of the session, with the Dow briefly dipping below the unchanged line.

Currently, the major averages are all in positive territory. The Dow is up 27.73 points or 0.1 percent at 38,178.03, the Nasdaq is up 56.16 points or 0.4 percent at 15,220.17 and the S&P 500 is up 13.45 points or 0.3 percent at 4,859.10.

The early strength on Wall Street came as some traders saw the sell-off on Wednesday as a buying opportunity amid optimism the markets will resume the upward trend seen throughout much of January.

While the Federal Reserve’s signals that an interest rate cut in March is unlikely contributed to yesterday’s nosedive, economists continue to believe it is a matter of “when, not if” the central bank will eventually lower rates.

CME Group’s FedWatch Tool is currently indicating a relatively modest 44.5 percent chance of a March rate cut but a nearly 100 percent chance rates will be lower by early May.

A continued decrease by treasury yields may also have contributed to the early upward move, with the yield on the benchmark ten-year note falling to its lowest levels in over a month.

Buying interest waned shortly after the start of trading, however, as traders seem reluctant to make significant bets ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect employment to increase by 180,000 jobs in January after jumping by 216,000 jobs in December, while the unemployment rate is expected to inch up to 3.8 percent from 3.7 percent.

A report from the Institute for Supply Management showing an unexpected increase by its reading on U.S. manufacturing activity may also have raised concerns strength in the economy will lead the Fed to continue postponing rate cuts.

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