Yellen Policy Commitment Supports Markets Advance, Import Price Index Falls

Nichole Harper
15 Nov, 2013
New York City

U.S. stocks extended gains and broader indexes advanced to new highs as Fed Chairman nominee Janet Yellen supported the easy monetary policy continuation. Import price index in October declined at the fastest pace in a year. Euro zone inflation dips to annual rate of 0.7%.

[R]10:50 AM New York – U.S. stocks extended gains and broader indexes advanced to new highs as Fed Chairman nominee Janet Yellen supported the easy monetary policy continuation. Import price index in October declined at the fastest pace in a year. Euro zone inflation dips to annual rate of 0.7%.[/R]

U.S. stocks turned higher in the first hour of trading as investors look for a continuation of easy monetary policy under a new leadership.

S&P 500 index gained 2.54 to 1,793.16 and the Nasdaq Composite Index increased 2.66 to 3,975.40.

Yellen to Continue Easy Money Fed Policy

Janet Yellen, Fed Chairman nominee to succeed Ben Bernanke, in her Senate Banking Committee assured lawmakers of the continuation of monthly bond purchase program.

Yellen also rejected the notion that the recent rise in stock and real estate prices are at a bubble level and added “we don’t see a broad buildup in leverage, where the development of risks that I think at this stage poses a risk to financial stability.”

Yellen held her ground during a two-hour questioning from senators and evaluated her comments on “Too Big to Fail” and quantitative easing or money printing, free money and continued bond buying program.

Yellen stressed that benefits outweigh the costs in bond buying program and the best way to tackle income inequality is to support job market recovery.

The banking committee is planning to vote on Yellen nomination as early as next week, according to sources in Washington, D.C.

Import Price Index Falls

U.S. industrial production declined 0.1% in October and capacity utilization decreased 0.2 percentage point to 78.1%. Federal Reserve reported.

Import price index declined at the fastest pace in a year and fell 0.7% in October from the previous month, the Labor Department said today.

The fall matched the decline in April and was the largest since June 2012.

The monthly decline was driven by the 3.6% fall in petroleum costs from September, the largest monthly decline since June 2012.

Euro Zone Inflation Dips to 0.7%

European markets trimmed early advance after the U.S. trading hours began and investors digested the latest inflation data.

In London, FTSE 100 index increased 0.2%, in Frankfurt the DAX index gained 0.07% and in Paris CAC 40 index increased 0.15%.

Annual rate of inflation in the euro zone was 0.7% in October, Eurostat said in a report released today.

The latest inflation rate was the lowest monthly rate since November 2009 and the reading played a key role in the European Central Bank’s decision to lower its reference rate last week.

Asian Markets Advance

Asian markets closed higher after the dollar strengthened against the yen to 100-mark and the Nikkei index in Tokyo advanced 2%. The yen closed at a two-month low.

The Nikkei extended weekly surge to 7.7%, best weekly rise in four years and the index closed above 15,000 for the first time since May.

Indexes in China surged 2% and in Hong Kong added 1.7% ahead of the release of economic reform measures after the four-day meeting of leaders and policy makers.

Chinese leaders passed 20,000-page economic reform directive with a list 63 specific projects to be implemented in the current year.

Markets in India were closed for a national holiday.

U.S. Stocks in Review

ExxonMobil ((XOM)) increased 1.2% after Warren Buffett controlled Berkshire Hathaway said in a regulatory filing it purchased 40.1 million shares in the oil explorer for $3.45 billion at the end of September.

Kimberly Clark ((KMB)) increased 0.9% after the company said it plans to spin-off its healthcare business with annual sales of $1.6 billion.

Men’s Wearhouse ((MW)) gained 0.2% after rival apparel chain Jos. A. Bank Clothiers terminated its $2.3 billion unsolicited takeover offer for the men’s clothing retailer.

Publicis Groupe SA increased 4% after the second largest advertising agency was the subject of a takeover target from the largest WPP Plc, the U.K. newspaper said.

WPP denied a report in a U.K. newspaper.