Wall Street closed virtually flat on Thursday, with any gains made pared by falling energy prices. The market corrected itself from the rate cut rally, which has continued to drive business over the past two months. One of the three major stock indexes ended marginally in the green, while two ended flat.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 53.58 points, or 0.1%, to close at 37,710.1. Twenty components of the 30-stock index ended in positive territory, while 10 ended in negative.

The tech-heavy Nasdaq Composite remained virtually flat at 15,095.14.

The S&P 500 remained virtually flat at 4,783.35. Eight of the 11 broad sectors of the benchmark index closed in the green. The Utilities Select Sector SPDR (XLU), the Real Estate Select Sector SPDR (XLRE) and the Financials Select Sector SPDR (XLF) advanced 0.7%, 0.6% and 0.3%, respectively, while the Energy Select Sector SPDR (XLE) declined 1.5%.

The fear-gauge CBOE Volatility Index (VIX) increased 0.3% to 12.47. A total of 9.5 billion shares were traded on Thursday, lower than the last 20-session average of 12.6 billion. Decliners outnumbered advancers very slightly on the NYSE by a 1.00-to-1 ratio. On the Nasdaq, declining issues led advancing ones by 1.08-to-1.

Market Corrects Itself From its Overbought Position

Over the past few weeks, Wall Street has boomed over Fed rate-cut expectations. According to CME’s FedWatch tool, market participants are not only banking on rate hikes having come to an end but are also predicting a 74.1% likelihood that the central bank will bring down interest rates by 25 bps in March 2024.

However, on Thursday, the market corrected itself from its overbought position and took out some profits. The movement was slow, and any gains made were balanced out by a fall in energy prices.

Oil prices fell 3% on Thursday as supply concerns eased with more shipping companies saying they were ready to transit the Red Sea route. Brent crude settled down $2.39, or 3%, at $77.15/barrel, while WTI crude fell by $2.34, or 3.2%, to $71.77 a barrel.

Consequently, shares of Marathon Oil Corporation (MRO Quick QuoteMRO - Free Report) and Exxon Mobil Corporation (XOM Quick QuoteXOM - Free Report) fell 1.9% and 1.5%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

The Labor Department said on Thursday that initial jobless claims rose to 218,000, increasing 12,000 for the week ending Dec 23. The previous week's level was revised up by 1,000 from 205,000 to 206,000. The four-week moving average decreased to 212,000, marking a fall of 250 from the previous week. The prior week's average was revised up by 250 to 212,250.

Continuing claims came in at 1,875,000 for the week ending Dec 16, increasing 14,000 from the previous week’s revised level. The prior week's numbers were revised down by 4,000 from 1,865,000 to 1,861,000. The four-week moving average was 1,864,500, a decrease of 12,500 from the previous week's revised average. Last week's average was lowered by 1,000 from 1,878,000 to 1,877,000.

Per a government report, for the week ending Dec 22, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 6.9 million barrels from the previous week. In the prior week, they had increased by 2.9 million barrels.

Per the National Association of Realtors, Pending Home Sales remained the same as the month prior. In October, they had gone down by 1.5%.