The stock markets in the United States declined today after enjoying four consecutive days of gains. Federal Reserve Chairperson Janet Yellen told the Congress that policymakers were likely to raise interest rates this year.
In her testimony the House Financial Services Committee, Yellen said the Federal Open Markets Committee (FOMC) will “determine the timing of the initial increase in the federal funds rate on a meeting by meeting basis.” It will depend on its assessment of realized and expected improvement in the labor market (maximum employment) and 2% inflation.
There has been much talk in recent years about disruption and trying to pick companies that will disrupt their industries. The debate continued at the Morningstar Investment Conference as Bill Nygren of Oakmark Funds faced off with Morgan Stanley's Dennis Lynch. Q2 2021 hedge fund letters, conferences and more Persistence Morningstar's Katie Reichart moderated the Read More
“If the economy evolves as we expect, economic conditions likely make it appropriate at some point this year to raise the federal funds rate target,” said Yellen. Last month, the FOMC indicated that the initial interest rate hike would be two-quarter point followed by a gradual pace of increases.
Bond manager Jeffrey Gundlach of Doubleline Capital commented that the Federal Reserve is unlikely to raise interest rates this year despite the statement of Yellen. According to him, if the Fed will increase interest rates prematurely, it would end up reducing again.
The Department of Labor reported an increase in wholesale prices in June. The agency said the producer-price index climbed 0.4% last month, higher than the 0.2% median estimate of economists polled by Bloomberg.
- Dow Jones Industrial Average (DJIA) – 18,050.17 (-0.02%)
- S&P 500- 2,107.40 (-0.07%)
- NASDAQ- 5,098.94 (-0.12%)
- Russell 2000- 1,264.62 (-0.68%)
- EURO STOXX 50 Price EUR- 3,623.87 (+0.46%)
- FTSE 100 Index- 6,753.75 (+0.00%)
- Deutsche Borse AG German Stock Index DAX- 11,539.66- (+0.20%)
- Nikkei 225- 20,463.33 (+0.38%)
- Hong Kong Hang Seng Index- 25,055.76 (-0.26%)
- Shanghai Shenzhen CSI 300 Index- 3,966.76 (-3.54%)
Stocks in Focus
The stock price of Bank of America climbed more than 3% to $17.70 per share after reporting strong financial results for the second quarter. The bank posted earnings of $5.3 billion or $0.45 per diluted share. Its revenue was $22.3 billion (net of interest expense, on an FTE basis).
Celgene Corporation gained nearly 7% to $131.39 per share after disclosing its agreement to acquire Receptos for $7.2 billion. The stock price of Receptos increased more than 11% to $230.08 per share.
The stock value of Macy’s increased almost 8% to $72.01 per share after Starboard Value acquired a stake in the company. Starboard Value CEO said Macy’s can unlock significant shareholder value by separating its real estate from its retail business. He believed that Macy’s stock price could reach as much as $125 per share.