The stock markets in the United States declined due to the statement of Federal Reserve Chairperson Janet Yellen that an interest rate hike is likely in December.
The Federal Reserve expected that economy to continue growing at a pace sufficient to drive further improvements in the labor market and to return the inflation rate to 2% over the medium term.
Ms. Yellen said December remains a “live possibility” for an interest rate hike.” She clarified, “But importantly, we’ve made no decision about it.” She added that the Fed will move in a timely fashion if data and outlook would justify raising interest rates.
According to her, such move is a “prudent thing to do because we will be able to move at a more gradual and measured pace. We fully expect that the economy will evolve in such a way that we can move at a very gradual pace, and of course, after we do so, we will be watching very carefully whether our expectations are realized.”
In an interview with Bloomberg, Thomas Garcia, head of equity trading at Thornburg Investment Management commented, “We’ve come back a long way since the end of September, but we’re not going to go straight back to a record. Investors are waiting to get more data points this week to assess a potential rate hike in December. Technicals may also be playing a role in keeping us from going much higher today.”
Today, a report from the ADP Research Institute showed a steady improvement in the labor market as companies added 182,000 jobs in October. The Department of Labor is scheduled to release its jobs report on Friday.
“American companies are continuing to hire at a pretty healthy rate. It’s reflecting strong growth in the U.S. economy. Strong job growth will reinforce a healthy trend in consumer spending,” said Sal Guatieri, a senior economist at BMO Capital Markets.
- Dow Jones Industrial Average (DJIA) – 17, 868.31 (-0.28%)
- S&P 500- 2,102.37 (-0.35%)
- NASDAQ- 5,142.48 (-0.05%)
- Russell 2000- 1,188.59 (-0.25%)
- EURO STOXX 50 Price EUR- 3,439.16 (-0.10%)
- FTSE 100 Index- 6,412.88 (+0.46%)
- Deutsche Borse AG German Stock Index DAX- 10,845.24 (-0.97%)
- Nikkei 225- 18,926.91 (+1.30%)
- Hong Kong Hang Seng Index- 23,053.57 (+2.15%)
- Shanghai Shenzhen CSI 300 Index- 3,628.54 (+0.06%)
Stocks in Focus
The stock price of BioScrip surged more than 26% to $2.68 per share despite reporting quarterly earnings the miss estimates. The company is in the process of transferring certain chronic therapies to various pharmacy providers, which is expected to contribute a positive impact of around $4 million to its annual EBITDA. Investors were also encouraged by its cost management plans.
Michael Kors Holdings gained more than 8% to $42.57 per share. The company reported that its revenue increased 6.9% to $1.13 billion. Its net income was $ $1.01 per share for its fiscal 2016 second quarter ended September 26, 2015.
The shares of Tesla Motors climbed more than 11% to $11.17 each. Investors were optimistic about the company’s better-than-expected outlook for the fourth quarter. Tesla Motors expected to deliver 17,000 to 19,000 vehicles in the fourth quarter. CEO Elon Musk said the order rates for Model S and Model X vehicles increased.