Wall Street moves lower after Yellen says equity valuations high
However, Yellen described risks to financial stability as “moderated, not elevated” and said she does not see any bubbles forming. The U.S. stock market has been choppy in the past few weeks as investors digest corporate results alongside a mixed bag of economic data.
The S&P 500 closed above its record high late last month, while the Nasdaq was in striking distance of its record high. But weak data has since pulled the indexes from these highs. U.S.
stocks opened slightly higher on Wednesday, but soon turned negative after Yellen’s comments. Disappointing private jobs numbers also fueled concerns about the economy’s potential to rebound from a first-quarter slump.
The Dow Jones industrial average .DJI was down 52.08 points, or 0.29 percent, at 17,876.12, the S&P 500 .SPX was down 4.26 points, or 0.2 percent, at 2,085.2 and the Nasdaq Composite .IXIC was down 9.84 points, or 0.2 percent, at 4,929.49. ADP payroll data showed U.S. private employers added 169,000 jobs last month, the fewest since January 2014 and far below economists’ expectations, posing a downside risk for the more comprehensive nonfarm payrolls report on Friday.
“We are more focused on Friday to see if those numbers are in line with the ADP numbers,” said Tim Dreiling, a senior portfolio manager at U.S. Bank Wealth Management, which oversees $128 billion.
“If they come in weak, it certainly makes more improbable that we’ll have a June lift-off and then maybe calls into question what happens in September.”
Adding to the weak jobs data, applications for U.S. home mortgages fell last week as interest rates jumped, while nonfarm productivity fell in the first quarter as harsh winter weather weighed on output. Stock markets globally have also been under pressure as the worldwide sell-off in government bonds deepened, spreading unease across all assets.
Eight of the 10 S&P sectors were lower, with telecoms .SPLRCL the worst of the lot, while the energy index .SPNY gained 0.5 percent as oil prices hit fresh 2015 highs.
Tech stocks, led by Apple (AAPL.O) and Microsoft (MSFT.O), were the biggest drag on the three major indices. The weak data and bond markets as well as Yellen’s comments overshadowed strong results from corporates and a mini revival in dealmaking.
MoneyGram (MGI.O) soared 23.72 percent to $9.65 after Bloomberg reported that Western Union (WU.N) was considering buying its smaller rival. Western Union rose as much as 9 percent to a record high of $22.84 Herbalife (HLF.N) jumped 15.7 percent to $46.37 after it raised its full-year profit forecast.
Synageva BioPharma (GEVA.O) soared 115.31 percent to $206.50 after Alexion (ALXN.O) offered to buy the company. Alexion was down 8.5 percent at $154.15. Wendy’s (WEN.O) rose 4.6 percent to $10.91 and EA (EA.O) gained 3.5 percent to $61.25 after the two companies reported better-than-expected results. Declining issues outnumbered advancing ones on the NYSE by 1,969 to 994, for a 1.98-to-1 ratio on the downside; on the Nasdaq, 1,406 issues fell and 1,160 advanced for a 1.21-to-1 ratio favoring decliners.