Yellen:Economy Needs Support, U.S. Market Indexes Lacks Direction

Nichole Harper
15 Jul, 2014
New York City

U.S. market indexes traded sideways and investors worried on rising valuations. Fed Chair Janet Yellen suggested economy still needs monetary support but did not offer a timetable for interest rate increase. Reynolds America and Lorillard revealed merger details.

[R]11:50 PM New York – U.S. market indexes traded sideways and investors worried on rising valuations. Fed Chair Janet Yellen suggested economy still needs monetary support but did not offer a timetable for interest rate increase. Reynolds America and Lorillard revealed merger details.[/R]

Market indexes traded flat and JPMorgan Chase and Goldman Sachs reported better than expected and Fed Chairman comments suggested interest rate is likely to remain on hold in the near future.

S&P 500 index decreased 5.36 to 1,971.37 and Nasdaq Composite Index dropped 30.01 to 4,410.41.

Tobacco makers’ stock declined after details of Reynolds American and Lorillard merger.

Reynolds America, second largest tobacco maker, announced today to acquire third-largest cigarettes maker Lorillard for $27.4 billion.

Two companies agreed to sell smaller brands to Imperial Tobacco for $7.1 billion. The purchase will establish Imperial with 10% market share.

After the merger, British American Tobacco will retain its 42% control in Reynolds and Lorillard shareholders will control 15% of newly merged company.

Federal Chair Janet Yellen said in her prepared remarks to Congress the economy is improving but still needs the central bank’s support.

Yellen refused to pin down the time table for the interest rate to increase and added, “The economic outlook is very uncertain.”

U.S. Movers

Goldman Sachs Group Inc ((GS)) added 0.8% to $168.34 after the investment bank and asset manager reported better than expected earnings.

JPMorgan Chase & Co ((JPM)) increased 4% to $58.49 after the largest U.S. bank by assets reported second-quarter earnings declined 9% and revenues in investment banking declined.

European Markets

In London trading, FTSE 100 index slipped 0.3% or 20.41 to 6,725.73 and in Frankfurt the DAX index fell 0.4% or 36.06 to 9,746.95.

Airbus signed major orders for A320 Family aircraft at the Farnborough International Airshow 2014.

The online gambling site operator, Bwin.party Digital revenue climbed 44% to €105 million.

Michael Page gross profit rose 2% to £137 million. Volkswagen plans to cut costs for about €5 billion from 2017.

Asian Markets

Stocks in Tokyo closed higher for the second day in a row and the yen edged ahead as earnings announcement pick up pace.

The Nikkei 225 Stock Average gained 98.34 or 0.6% to 15,395.16 and the broader Topix index rose 8.22 to 1,273.68.

The yen declined nearly 0.1% to close at 101.59 against one U.S. dollar.

More than sixty companies are expected to release earning this week and Maezawa Industries soared after the maker of sewage equipment maker estimated annual earnings to soar 49% to 720 million yen.

The Sensex Index jumped 221.67 or 0.9% to close at 25,228.65 The CNX Nifty gained 72.50 to 7,526.65.

On the corporate front in India, DCB Bank net jumped 5% on 35% increase in revenue and L&T secured an order worth $846 million from Kuwait.

NIIT, the software services provider and one of the largest software services provider said latest quarterly net declined 19%.

Sadbhav Engineering received a work order worth Rs 550 crore from a mining company in Rajasthan state. Tata Sponge profit surged 145%.