The Dow ended in the red to post its fourth successive day of losses on Tuesday, dragged down by decline in shares of McDonald’s. The S&P 500 and the Nasdaq posted paltry gains and managed to end in the positive territory. Shares of Apple gained 1.7%, ending its streak of losses. Meanwhile, in a speech at Cleveland, Fed Chairwoman Janet Yellen cautioned against raising the interest rates gradually. She reasoned that this might lead to overheating of the economy and also financial instability.
The Dow Jones Industrial Average (DJIA) closed at 22,284.32, losing 0.1 %. The S&P 500 Index (INX) increased 0.2% to close at 2,496.84. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,380.16, increasing 0.1%. Advancing issues outnumbered decliners on the NYSE by 1,585 to 913. On the Nasdaq, advancers outnumbered decliners by 1,448 to 804. The CBOE VIX decreased 0.4% to close at 10.17.
Dow Posts Its Fourth Successive Day of Losses
The Dow shed 11.77 points on Tuesday to end the session in the red. This marked the blue-chip index’s fourth successive day of losses for the first time since June. Biggest drag on the Dow was decline in the shares of McDonald’s (MCD – Free Report) , which dropped almost 2%. On the other hand, Apple (AAPL – Free Report) improved 1.7%, ending its four-day streak of losses. However, the iPhone maker’s gains failed to pare losses for the Dow. McDonald’s possesses a Zacks Rank #2 (Buy) and Apple possesses a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
S&P 500, Nasdaq Post Minimal Gains
The S&P 500 gained less than a point, only to end meagerly higher. Of the 11 major sectors of the S&P 500, eight ended in the negative territory, with telecom and materials stocks decreasing 0.9% and 0.4%, respectively. The Materials Select Sector SPDR ETF (XLB) declined 0.4% to close at 56.40. Meanwhile, the Nasdaq composite gained almost 10 points to end in the green.
The Russel 2000 index gained 0.3% or 4.9 points to close at a fresh record of 1456.86. The small-cap index has gained almost 3.5% so far in September, surpassing the S&P 500 by more than double the margin.
Janet Yellen Cautions against a Gradual Pace of Rate Hike
While addressing the National Association for Business Economics meeting at Cleveland on Tuesday, the Yellen cautioned against raising the interest rate gradually. She said that it would rather be ‘imprudent’ to wait till the inflation levels reach 2% and then increase the interest rates gradually as this might lead to labor market becoming overheated. Consequently, such a scenario would lead to inflation problems for the economy and hence financial instability, said Yellen.
Interestingly, only four of the 16 highest Fed officials have vouched to wait till 2018 in order to increase the interest rates. The CME FedWatch predicted a 76% probability of a rate hike in December.
Yellen also commented that the problem of lower than targeted inflation rates is ‘temporary’ and the inflation rates would normalize and reach the targeted 2% in the course of next few years. She also stated that one must not rely on the predictability of the central bank when it comes to the amount by which rates might be hiked.
Consumer Confidence for the month of September deceased to 119.8 from 120.4 in the month of August. The consensus estimate for the period was 118.9. Meanwhile, New Home Sales for August decreased to 560,000 from 580,000 in July. The consensus estimate for the period was 588,000.
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