US stocks slipped on Thursday, marking a third consecutive session of losses as investor sentiment dimmed following Federal Reserve Chair Jerome Powell's remarks suggesting a more cautious approach to rate cuts. The dollar, meanwhile, gained strength as recent data reinforced a tempered economic outlook.

Data from the Labor Department indicated a slight decline in initial jobless claims, with figures dropping by 4,000 to 217,000, just below economists' expectations of 223,000. This improvement follows an unexpectedly weak October payroll report, which analysts now view as an anomaly.

The US Producer Price Index (PPI) for final demand matched forecasts, climbing by 0.2% in October after a revised 0.1% rise in September. On an annual basis, the PPI was up 2.4%, signalling steady price pressures.During a speech, Powell underscored that while economic growth and job strength remain robust, inflation is still above the Fed's 2% target. This, he suggested, gives the central bank room to take a cautious approach to reducing rates.

Wall Street's main indices were impacted by these developments. The Dow Jones Industrial Average dipped 0.47% to close at 43,750.86, while the S&P 500 and Nasdaq Composite both fell by 0.60% and 0.64%, respectively.

Globally, the MSCI gauge of world stocks slipped by 0.53%, further extending losses, while European markets managed gains, led by a rally in energy and tech shares on positive earnings results. The dollar index rose 0.45% to 106.94, bolstered by strong US data and the less dovish outlook from the Fed.

Investors continue to watch inflation dynamics and potential fiscal policy changes, especially as President-elect Donald Trump's proposed tariffs and tax cuts could drive inflation upward. Bond yields, including the US 10-year Treasury, also edged up after Powell's remarks, reflecting the market's cautious optimism and the Fed's deliberate stance on rate adjustments.