Wall Street Loses Steam Ahead of Fed Chair's Speech

WALL STREET - NEW YORK. The S&P 500 and the Nasdaq reversed early gains on Thursday as bond yields hit fresh multi-year highs ahead of a speech by Federal Reserve Chair Jerome Powell, with investors worried about aggressive interest rate hikes this year.

All the three major indexes opened higher, boosted by strong results from heavyweight Tesla and airline operators, but gave up gains by afternoon trading.

Powell is set to speak at 1:00 p.m. ET at an International Monetary Fund debate. Investors will look for fresh clues on monetary policy tightening, with many expecting the U.S. central bank to raise interest rates by 50 basis points to control soaring inflation.

U.S. Treasury yields rose, with two-year yields, the most sensitive to interest changes, hitting their highest in three years.

"Some of the members of the Fed have definitely gone out there and said 75 basis points, or certainly 50, if not 75 is warranted at the next meeting. I certainly want to hear where he stands on that," said Josh Wein, Portfolio Manager at Hennessy Funds.

Data showed the number of Americans filing new claims for unemployment benefits fell moderately last week, suggesting that April was another month of strong job growth.

Megacap growth stocks such as Alphabet Inc and Amazon.com Inc fell more than 1% each.

Tesla, the world's most valuable automaker, jumped 6.1% after its results beat Wall Street expectations as higher prices helped it overcome supply-chain chaos and rising costs.

"In a world that's desperately looking for growth, Tesla is a reminder that there are some very strong growth stories and also stories that defy the new norm," Wein said.

United Airlines Holdings Inc and American Airlines Group Inc climbed 11.4% and 4.6%, respectively, after they predicted a return to profit in the current quarter due to booming travel demand.

Overall, analysts expect S&P 500 earnings growth of 6.5% in the first quarter as of Wednesday, compared with the 32.1% rise in the fourth quarter, according to Refinitiv data.

At 12:19 a.m. ET, the Dow Jones Industrial Average was up 51.09 points, or 0.15%, at 35,211.88, the S&P 500 was down 3.72 points, or 0.08%, at 4,455.73, and the Nasdaq Composite was down 51.37 points, or 0.38%, at 13,401.69.

Neflix fell 3.4%, adding to 35% plunge in the previous session, as billionaire investor William Ackman liquidated a $1.1 billion bet on the streaming giant.

Declining issues outnumbered advancers for a 1.68-to-1 ratio on the NYSE and a 1.97-to-1 ratio on the Nasdaq.

The S&P index recorded 76 new 52-week highs and 12 new lows, while the Nasdaq recorded 62 new highs and 226 new lows.