Wall Street Scales Back on Yellen Comments and Productivity Report

Nichole Harper
06 May, 2015
New York City

Stocks on Wall Street traded lower after comments from Fed Chair Janet Yellen and weaker-than-expected read on productivity. Crude oil continued to advance to new high in 2015. Oil complex companies reported sharply higher losses on weak energy prices.

[R]2:20 PM – Stocks on Wall Street traded lower after comments from Fed Chair Janet Yellen and weaker-than-expected read on productivity. Crude oil continued to advance to new high in 2015. Oil complex companies reported sharply higher losses on weak energy prices.[/R]

Stocks on Wall Street continued to struggle as investors digested the latest batch of corporate earnings and weaker-than-expected productivity and private employment data and cautious comments from Fed Chair Janet Yellen.

Preliminary non-farm business sector labor productivity fell 1.9% annual rate during the first-quarter, the Department of Labor said.

On Wall Street, Tollbooth Strategy Index slid 1.68 to 10,613.85.

S&P 500 index fell 6.91 or 0.3% to 2,082.62 and the Nasdaq Composite Index slipped 13.02 or 0.3% to 4,925.94.

Crude oil in New York gained 75 cents to $61.15 a barrel and gold fell $3.10 to $1,190.10 an ounce.

Federal Reserve Chair Janet Yellen said central bank has made considerable progress in reducing risks to the financial system and in preparing large banks with higher level of liquidity.

Yellen added that she does not see the bubble in the making and overall risks to financial stability are “moderate and not elevated at this point.”

Yellen in conversation with Christine Lagarde, managing director of the International Monetary Fund, highlighted that equity market “valuation at this point generally are quiet high.”

Her comments drove market indexes lower and Yellen added that one reason stock prices were high is because of low interest rates are generating meager returns on bonds.

Yellen and Lagarde were talking at a conference on finance sponsored by the Institute for New Economic Thinking.

U.S. Movers

Chesapeake Energy Corporation ((CHK)) declined 2.9% or 46 cents to $15.40 after the oil and gas producer reported revenues in the first-quarter ending in March plunged 45.3% to $2.76 billion from a year ago period.

Net in the quarter swung to a loss of $3.78 billion or $5.72 per diluted share compared to profit of $374 million or 54 cents from the same quarter last year.

Occidental Petroleum Corporation ((OXY)) gained 1.6% or $1.26 to $79.89 after the oil and gas explorer reported revenues in the first-quarter ending in March plummeted 37.7% to $3.09 billion from a year ago period.

Net in the quarter swung to a loss of $218 million or 28 cents per diluted share compared to profit of $1.39 billion or $1.75 from the same quarter last year.

European Markets

Market indexes across Europe rebounded after retail sales were ahead of expectations.

Retail trade sales in March fell 0.8% compared to February in euro area and 0.6% in the wider region of EU28 and February retail sales increased 0.1% in the euro area and in the EU28.

Retail sales index jumped 1.6% from a year ago month in the euro area and 2.5% in the EU28, the Statistical Office of the European Communities said.

In London trading, FTSE 100 index gained 0.4% or 25.12 to 6,952.70 and in Frankfurt the DAX index rose 0.2% or 22.31 to 11,349.99.

In Paris, CAC 40 index increased 0.3% or 15.49 to 4,989.56.

Bayerische Motoren Werke AG slipped 0.6% to €105.85 after Germany-based automaker reported revenues in the first-quarter ending in March surged 14.7% to €20.92 billion form €18.23 billion in a year ago period.

BMW said Net income in the quarter jumped 4% from a year ago to €1.52 billion compared to €1.46 billion and diluted earnings per share increased to €2.30 from €2.22.

For the quarter, sales soared 8.1% to 526,691 vehicles from 487,024 vehicles and total production jumped 7% to 556,274 vehicles compared to 519,927 vehicles in a year ago period.

Societe Generale SA declined 3.3% to €43.28 after the France-based banking and financial service provider reported net revenues in the first-quarter ending in March climbed 12% to €6.35 billion from €5.66 billion in a year ago period.

Net income in the quarter soared more than four-fold from a year ago to €868 million compared to €169 million.

J Sainsbury Plc plunged 4.1% to 263.80 pence after the U.K.-based supermarkets and convenience stores operator reported revenues in the year ending in March fell 0.7% to £23.78 billion from £23.95 billion in a year ago period.

Net in the year swung to a loss to £166 million compared to profit of £716 million in the year ago period and diluted loss per share swung to 8.7 pence from diluted earnings per share of 36.9 pence.

Asian Markets

Markets in Japan were closed for a weeklong holiday.

Sensex index in Mumbai plunged to a 4-month low on sell orders kicked by computer trading driven by foreign investors.

Stocks opened lower and power sector led the early decliners but after about an hour of trading, sell orders overwhelmed buyers and market indexes quickly declined as the sell-off widened.

In corporate news, Bharti Airtel gained after France-based AXA won an approval from the Foreign Investment Promotion Board to increase its stake to 49% form 26% in its venture with Bharti.

Rupee weakened 9 paisa 63.53.

The Sensex Index declined 722.77 or 2.6% to close at 26,717.37. The CNX Nifty dropped 227.80 or 2.7% to 8,097.