USA stocks opened higher, seeking their first gain this week, as beaten-down energy and financial companies rebounded.
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Investors were mostly focused on Fed Chair Janet Yellen’s remarks on the economy and interest rates as she delivered her semiannual report to Congress.
“Global central bank policy is increasingly becoming a symptom of what’s wrong with the financial markets and real growth than a cure for economic ills”, said Bernard Aw, market strategist at IG in Singapore.
“Sentiment towards risk assets remained extremely bearish and price action reflected a market that may be capitulating”, said Jo Masters, a senior economist at ANZ. “If they’d gotten the sense that the Fed was on autopilot and was predestined to a certain number of rate hikes in 2016, that would have been troublesome”.
The Dow Jones industrial average rose nine points, or 0.1 percent, to 16,023 as of 12:10 p.m. Eastern Time. The average is now down 8.7 percent this year. The Standard & Poor’s 500 lost 24 points, or 1.4 percent, to 1,826. The index is off 9.4 percent this year. The Nasdaq composite added 56 points, or 1.3 percent, to 4,325.
An early rally on the stock market was mostly gone by the closing bell, leaving indexes with a mixed finish after being up most of the day.
Benchmark U.S. crude was up $1.23 to $27.44 a barrel in electronic trading on the New York Mercantile Exchange.
In commodities, the March contract for benchmark crude oil was down for a fifth consecutive session, off 54 cents at US$27.40 a barrel.
All of which raised the stakes for Federal Reserve Chair Janet Yellen’s testimony on Thursday. The Korean peninsula is a potential flashpoint for the US and China.
Concerns are growing that the mounting market turmoil could put a brake on the global economy at a time it is already struggling with a litany of issues – from China’s slowdown, low inflation and plunging energy markets.
“The market is disappointed in that and looking for more direct comment on perhaps pushing out rate increases”, Nixon said.
“Higher interest rates can be detrimental to equities, although we’re of the view that we’re not at risk of higher interest rates in the short term”, Davidson said.
All 10 sectors in the S&P 500 index closed lower. Australia’s S&P/ASX 200 shed 1.2 percent. Disney dropped 4.5 percent a day after it reported that its ESPN network has hit a soft patch. Time Warner recovered somewhat from an early slide.
OVERSEAS MARKETS: In Europe, Germany’s DAX dropped 1.8 per cent, while France’s CAC 40 slid 2.8 per cent, dragged down by a 13 per cent drop in the shares of bank Societe Generale, which warned about its profits. Britain’s FTSE 100 shed 1.6 percent. Energy stocks slumped 2.9 percent as oil prices continued to decline.
Tokyo’s Nikkei 225 lost 5.3 percent to 14,886.75 and Hong Kong’s Hang Seng fell 0.8 percent to 18,395.69. China and Taiwan will reopen on Monday.
Precious metals prices closed lower. The yield on the 10-year Treasury held steady at 1.73 percent.
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Banks rose Friday after Deutsche Bank offered to buy more than $5 billion in bonds. It also fell against the euro, which was up to $1.1342 from $1.1282. Southwestern Energy lost 79 cents, or 9.2 percent, to $7.79, while Marathon Oil fell 47 cents, or 6.5 percent, to $6.66.
