US stocks mostly rose this afternoon, bouncing off earlier lows after comments from Federal Chair Janet Yellen offered no new surprises, but the Nasdaq fell for the second straight day, stymied by declines in internet-related shares.
By Paolo Palazzi-Xirinachs
Wednesday, May 7, 2014
The Dow and the S&P moved into positive territory after Yellen said the US economy was still in need of lots of support, given the "considerable slack" in the labor market in remarks to the congressional Joint Economic Committee. But Nasdaq remained under pressure as stocks such as Amazon.com , Facebook and Google were all down, and it weighed heavily on the index. The Nasdaq has dropped more than 2% over the past two sessions. The technology-heavy Nasdaq Composite slid 0.7% to extend yesterday’s 1.4% drop, while the S&P increased 0.4%. Yellen's comments also allowed investors to shift attention to what may be an easing of the tensions in Ukraine, after Russian President Vladimir Putin called on pro-Moscow separatists in Ukraine to postpone a vote on secession just five days before it was to be held.
In the latest snapshot of the US economy, the Labor Department said that US nonfarm productivity fell at its fastest pace in a year in the first quarter because of severe weather. That led to the largest gain in unit labor costs in more than a year. Productivity fell at a 1.7% annual rate in the quarter, the Labor Department said. US equities climbed last week, sending the Dow Jones Industrial Average (INDU) to a record, after the Fed said the economy is gaining momentum as consumers spend more. The central bank is winding down record stimulus as the world’s largest economy shows signs of rebounding from a first-quarter standstill.
At the same time, the Fed repeated that it’s likely to keep the benchmark interest rate near zero for a “considerable time” after bond purchases end. The Treasury market yield curve steepened after Yellen tempered expectations for an acceleration of interest-rate increases. The difference in yields between five- and 30-year securities increased to about 175 basis points, or 1.75% points, as investors bet moderate growth will prompt the central bank to stick with forecasts for increases next year. Benchmark 10-year notes were little changed as the US sold $24 billion of the securities.
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