NEW YORK - Stocks turned lower on Thursday as investors looked ahead to a gathering of central bank officials that could dash hopes a respite in interest rate hikes.
Meanwhile stellar earnings by Nvidia, the major supplier of processors for AI, initially boosted sentiment regarding the wider tech sector but gains quickly evaporated on the tech-heavy Nasdaq.
Stocks had rebounded Wednesday after a series of disappointing economic data had raised hopes that monetary policymakers might pause raising interest rates to contain inflation, and bond yields fell.
Traders have spent most of August fretting that the Federal Reserve will be forced to raise interest rates further to contain inflation owing to a string of reports pointing to a resilient US economy and jobs market, while the Bank of England and ECB are also tipped to raise rates again.
Bond yields have risen in anticipation, increasing borrowing costs for companies and consumers, and stock prices have slid in consequence.
But surveys released Wednesday showed economic activity slowing in Europe and that growth had stalled in the United States, prompting a drop in bond yields as hopes were raised this would allow monetary policymakers to hold off on further rate hikes.
"In terms of PMIs in the US and Europe, it's good news for the market because they are now expecting no more rate hikes in the future," Grace Tam, at BNP Paribas Wealth Management, said on Bloomberg Television.
The positive sentiment continued into Asian trading on Thursday, but Europe turned mostly lower in afternoon trading, and Wall Street also quickly slipped into the red. London stocks bucked the trend thanks to a weak pound.
On Thursday, first-time claims for unemployment benefits came in lower than analysts forecasted, while core orders for durable goods beat expectations, demonstrating once again the resilience of the US economy despite high rates.
The data comes as Fed chief Jerome Powell and European Central Bank head Christine Lagarde prepare to make speeches at a keenly followed annual gathering of central bankers and business leaders at Jackson Hole, Wyoming, on Friday.
"The US economy and labour market continue to exceed expectations ahead of Fed Chairman Powell's highly-anticipated speech at the Jackson Hole Symposium," said Matthew Weller, global head of research at Forex.com and City Index.
While Weller said the market doesn't currently expect a rate hike in September, Axel Rudolph at online trading platform IG said Powell "is expected to disappoint investors looking for reassurance that US rates have peaked".
Meanwhile the boost to sentiment from the strong performance of Nvidia, whose products play a crucial role in artificial intelligence systems, failed to durably pull up other tech stocks.
The Silicon Valley-based company said after markets closed on Wednesday that sales doubled year-on-year to $13.5 billion in the latest completed quarter, leaving a net profit of $6.2 billion -- an eye-watering 843 percent higher than a year before.
Signalling that the boom in AI is still going strong, Nvidia said revenue in the current quarter would ramp up further to $16 billion.
Nvidia's stock rose as much as 10 percent following the results in after-hours trading, and jumped 6.5 percent at the opening of trading, but had given up most of those gains as trading in New York approached midday.
- Key figures around 1530 GMT -
New York - Dow: DOWN 0.3 percent at 34,358.54 points
London - FTSE 100: UP 0.2 percent at 7,333.63 (close)
Frankfurt - DAX: DOWN 0.7 percent at 15,621.49 (close)
Paris - CAC 40: DOWN 0.4 percent at 7,214.46 (close)
EURO STOXX 50: DOWN 0.8 percent at 4,232.22 (close)
Tokyo - Nikkei 225: UP 0.9 percent at 32,287.21 (close)
Hong Kong - Hang Seng Index: UP 2.1 percent at 18,212.17 (close)
Shanghai - Composite: UP 0.1 percent at 3,082.24 (close)
Euro/dollar: DOWN at $1.0833 from $1.0868
Pound/dollar: DOWN at $1.2631 from $1.2727
Euro/pound: UP at 85.74 pence from 85.40 pence
Dollar/yen: UP at 145.69 from 144.80 yen on Wednesday
West Texas Intermediate: DOWN 0.2 percent at $78.72 per barrel
Brent North Sea crude: DOWN 0.2 percent at $83.03 per barrel