Stock markets in the United States fluctuated after Federal Reserve Chair Janet Yellen testified that a “high degree of monetary accommodation remains warranted” to continue to support economic growth. She made her comments during a hearing conducted by Congress’ Joint Economic Committee. She emphasized that the indicators for inflation and employment are still far from the central bank’s target.
The Dow Jones Industrial Average (DJIA) and the S&P 500 ended the trading session 0.72% and 0.56% higher, while the NASDAQ declined 0.32% today.
Yellen also noted signs of over-valuation in some areas of the equity markets, but she emphasized that the broad market has not developed a bubble. According to her, “There are pockets where we could potentially see mis-valuations in smaller-cap stocks. Overall,those broad metrics don’t suggest that we are in obviously bubble territory. We don’t have targets for equity prices and can’t detect if we’re in a bubble with certainty.”
Last week the Federal Open Market Committee (FOMC) reduced the monthly bond buying program by $10 billion, cutting it to $45 billion. Policy makers stated that further reductions through measured steps are likely as the economy continues to improve.
In a telephone interview with Bloomberg, Chad Morganlander, a fund manager at Stifel Nicolaus & Co., commented, “You’re seeing a brutal shift from growth and momentum investing to more value-based investing.” He added, “The momentum stocks are ridiculously overvalued, but nonetheless, the overall broader market is fairly valued. Any kind of shift in momentum does spook investors.”
U.S. Markets
- Dow Jones Industrial Average (DJIA)- 16,518.54 (+0.72%)
- S&P 500- 1,878.21 (+0.56 %)
- NASDAQ- 4,067.67 (-0.32%)
- Russell 2000- 1,106.08 (-0.17%)
European Markets
- EURO STOXX 50 Price EUR- 3,159.67 (+0.31%)
- FTSE 100 Index- 6,794.44 (-0.03%)
- Deutsche Borse AG German Stock Index DAX- 9,521.30 (+0.57%)
Asia-Pacific Markets
- Nikkei 225- 14,033.45 (-2.93%)
- Hong Kong Hang Seng Index- 21,746.26 (-1.05%)
- Shanghai Shenzhen CSI 300 Index- 2,137.32 (-0.93%)
Stocks in Focus
The stock price of Chesapeake Energy Corporation (NYSE:CHK) gained 43.44%, rising to $29.61 per share after the second largest natural gas producer in the United States reported better than expected first quarter earnings results. The energy company posted 59 cents per share in adjusted earnings, which was higher than the 47 cents per share in adjusted earnings expected by analysts. Its revenue increased from $3.4 billion to $5.04 billion during the period. The company also indicated that it is on track to generate more cash compared to its spending for the first time since 2001.
Shares of FireEye Inc (NASDAQ:FEYE) declined nearly 23% to $28.65 per share despite reporting better-than-expected sales results for the first quarter. The decline was primarily driven by its own forecast that it will incur losses, more than what analysts expect this year. The company estimated that its losses for the fiscal year will be in the range of $2.10 to $2.30 per share due to increased R&D spending ahead of new product launches.
The stock price of Groupon Inc (NASDAQ:GRPN) dropped more than 20%, falling to $5.33 per share after the company forecast earnings in the range of 0 cents to 2 cents per share and revenue in the range of $725 million to $775 million for the second quarter. Wall Street analysts had estimated that it would be able to deliver adjusted earnings per share of 3 cents on $754.4 million revenue.
