Wall Street rises modestly following Yellen speech
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NEW YORK, Aug 26 — US stocks rose slightly yesterday, lifted by high-dividend-paying stocks, after Federal Reserve Chair Janet Yellen stayed silent on monetary policy in a much-anticipated speech.
Interest-rate sensitive sectors such as telecommunications, up 0.8 per cent, and utilities, up 0.3 per cent, rose as Yellen’s speech did not comment on the path of interest rate hikes for the central bank, which sent US Treasury yields lower.
“The worry still remains about the 10-year (benchmark Treasury note) rate, still below 2.2 per cent,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.
“That is kind of a concern and it doesn’t surprise me you are starting to see stocks hang in there only because everybody is searching for yield.”
Yellen’s speech at the annual meeting of central bankers in Jackson Hole, Wyoming focused on financial stability while giving no hint on monetary policy, leaving the prospect of more interest rate hikes up in the air.
She said the reforms put in place after the 2007-2009 financial crisis have strengthened the financial system, without impeding economic growth.
Meanwhile, a speech by European Central Bank chief Mario Draghi gave little guidance on tapering the bank’s bond holdings and heralded globalisation over protectionism.
“If anything, both with Draghi and Yellen, the big fear from investors was a more hawkish stance on monetary policy,” said Jeffrey Cleveland, chief economist at Payden & Rygel in Los Angeles. “Those fears were overblown. You didn’t have that hawkish surprise.”
The euro rose to its highest in more than two years after Draghi’s comments while the dollar index weakened 0.75 per cent. US Treasury yields fell.
The Dow Jones Industrial Average rose 30.27 points, or 0.14 per cent, to end at 21,813.67, the S&P 500 gained 4.08 points, or 0.17 per cent, to 2,443.05 and the Nasdaq Composite dropped 5.68 points, or 0.09 per cent, to 6,265.64.
For the week, the Dow rose 0.65 per cent, the S&P 500 gained 0.72 per cent and the Nasdaq climbed 0.79 per cent. The weekly gains for equities snapped a two-week skid of declines for the Dow and S&P 500 and a four-week drop for the Nasdaq.
US stocks got off to a strong start after President Donald Trump’s chief economic adviser Gary Cohn said the White House would turn its attention to the long-awaited tax reform agenda next week.
Treasury Secretary Steven Mnuchin said the US debt ceiling, a hurdle to be crossed before any tax reform can take place, will be raised in September and that after talks with congressional leaders from both parties everyone is “on the same page.”
Broadcom’s shares were down 3.7 per cent after its quarterly earnings report weighed the most on the S&P 500 technology index as well as the Nasdaq and S&P.
Energy shares, up 0.52 per cent, also advanced on a climb in oil prices as major Hurricane Harvey drew closer to the Texas Gulf Coast.
Shares of Autodesk were up 3.9 per cent after the software maker raised its forecast.
Advancing issues outnumbered declining ones on the NYSE by a 2.33-to-1 ratio; on Nasdaq, a 1.51-to-1 ratio favoured advancers.
About 4.81 billion shares changed hands in US exchanges, well below the 6.02 billion daily average over the last 20 sessions. — Reuters