(Reuters) - U.S. stocks turned lower in early trading on Thursday, with investors still on edge as volatility in financial markets persisted following the worst declines in more than two-and-a-half years earlier in the week.
Wall Street ran out of steam on Wednesday after an early surge as investors were still cautious after a bruising sell-off that saw the Dow Jones Industrial Average post its biggest intraday drop on record this Monday.
The market’s main gauge of volatility, the CBOE Volatility Index .VIX, fell to 26.18 on Thursday, still more than twice the level it held over the past few months. The index hit its highest level since August 2015 on Tuesday.
Investors are weighing whether the sharp swings are the start of a deeper correction or just a temporary bump in the nine-year bull market, spurred by concerns over rising interest rates and bond yields.
“While volatility in the markets has eased over the last couple of days, it has remained at very high levels - probably a sign of the ongoing nervousness among investors which may leave markets vulnerable to further declines,” Craig Erlam, senior market analyst at Oanda said in a note.
At 12:16 p.m. ET, the Dow Jones Industrial Average .DJI was down 610.66 points, or 2.45 percent, at 24,707.94, and the S&P 500 .SPX was down 14.11 points, or 0.52 percent, at 2,667.55.
The Nasdaq Composite .IXIC was down 30.45 points, or 0.43 percent, at 7,021.53.
Nine of the 11 major S&P sectors were lower, with the industrials .SPLRCI index’s 0.57 percent fall leading the decliners.
Dallas Fed President Robert Kaplan said on Thursday the central bank could hike rates three times this year and the recent market volatility in itself was not enough to change his base scenario.
Minneapolis Fed chief Neel Kashkari and Kansas City Fed President Esther George are expected to make appearances at different events later in the day.
The 10-year U.S. Treasury yield US10YT=RR crept back to 2.875 percent, near Monday’s four-year peak of 2.885 percent.
Economic data showed weekly jobless claims fell to 221,000 below the 232,000 rise expected by economists, dropping to its lowest level in nearly 45 years as the labor market tightened further.
Among stocks, Twitter jumped 23 percent after it reported its first quarterly net profit and topped Wall Street targets as video ad sales rose.
Teva Pharmaceutical fell 5 percent after the world’s largest generic drugmaker forecast 2018 would be weaker than analysts estimate as the U.S. generics market continues to deteriorate.
Yelp was down 8.5 percent after a host of brokerages cut their price targets on the consumer review website operator’s stock following quarterly results.
Tyson Foods rose 2 percent after the No. 1 U.S. meat processor reported better-than-expected quarterly results.
Declining issues outnumbered advancers on the NYSE by 1,782 to 823. On the Nasdaq, 1,658 issues fell and 827 advanced.
The S&P 500 index showed no new 52-week highs and three new lows, while the Nasdaq recorded 12 new highs and 24 new lows.
Reporting by Tanya Agrawal; Editing by Saumyadeb Chakrabarty