US stocks zig-zagged in early trading, opening lower, regaining momentum to turn positive, then dropping again.
Advertisement
Oil prices fell 3 percent as China ramped up exports of refined products, US oil producers added rigs for an eighth straight week and prospects emerged for increased exports from Iraq and Nigeria.
Yellen is due to speak at the Kansas City Fed’s monetary policy symposium in Jackson Hole, Wyoming, on Friday, and traders are likely to keep a close eye on her remarks for clues about the outlook for rates.
The S&P 500 fell 4 points, or 0.2%, to 2,180, while the Dow industrials declined 69 points, or 0.4%, to 18484. The Nasdaq Composite Index fell 10 points, or 0.2%, to 5,228.
On the corporate front, pharmaceutical giant Pfizer shares nudged higher after confirming it will buy biotech firm Medivation Inc.for about $14bn. Regeneron Pharmaceuticals, Vertex Pharmaceuticals and Alexion Pharmaceuticals all were up 3 percent or more.
“The behavior of employment has been remarkably resilient”, he said, adding that inflation outside of food and energy prices was “within hailing distance” of 2%, the Fed’s target rate. US West Texas Intermediate (WTI) crude futures fell $1.59 or 3.3% to $46.93 a barrel on the New York Mercantile Exchange.
US stocks struggled for direction Monday, erasing small early losses to trade near unchanged as investors await a speech by Federal Reserve Chairwoman Janet Yellen at the end of the week. However, if the US will not increase rates, several other central banks will be ready to lower their rates so that the value of the USA dollar will not totally decline.
The CME Group’s FedWatch Tool, which tracks the market’s expectations for the Fed funds rate, sees the likelihood of a September hike to a range of 50 to 75 basis points (bps) at just 18%. “Although total PCE inflation was less than 1 percent over the 12 months ending in June, core PCE inflation, at 1.6 percent, is within hailing distance of 2 percent – and the core consumer price index inflation rate is now above 2 percent”, long-term investors could ask themselves what keeps the Fed on hold, at least so far, from starting its long way to normalization of its Fed funds rates. The last time the S&P 500 had a move of 1 percent or more was July 8, when it rose 1.5 percent.
“A week of talking up the US dollar will be good for USA financial stocks that would benefit from a rate rise and some of that positivity could spread over into financials globally”, he said.
Advertisement
A week of talking up the United States dollar will be good for USA financial stocks that would benefit from a rate rise and some of that positivity could spread over into financials globally.
