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U.S. stocks trade higher, Dow up 100 points while waiting for Yellen

Published 10/14/2016, 11:23 AM
Updated 10/14/2016, 11:23 AM
© Reuters.  Wall Street moves higher post-data and bank earnings; Yellen on tap

© Reuters. Wall Street moves higher post-data and bank earnings; Yellen on tap

Investing.com – Wall Street traded higher after a string of data and slew of bank earnings with markets still looking ahead to a widely anticipated appearance by Federal Reserve (Fed) chief Janet Yellen.

At 11:21AM ET (15:21GMT), the Dow Jones gained 101 points, or 0.57%, the S&P 500 rose 8 points, or 0.36% and the tech-heavy Nasdaq Composite traded up 30 points, or 0.63%.

As investors on the Street opted to buy after a deluge of references on Friday, market participants were still awaiting any possible clues from the Fed chair on the timing of the next rate hike.

Yellen is scheduled to deliver a speech on “Macroeconomic Research After the Crisis” at the Federal Reserve Bank of Boston’s Annual Research Conference on Friday at 1:30PM ET (17:30GMT), according to the Federal Reserve’s website (the Boston Fed’s agenda for the conference lists Yellen as giving a keynote address at 12:30PM ET).

The speech comes after the minutes from the September 20-21 Fed meeting revealed that several voting members of the policy committee judged a rate hike would be warranted "relatively soon" if the U.S. economy continued to strengthen.

While there are two more meetings scheduled this year, on November 1-2 and December 13-14, several analysts have argued that the Fed would be “unlikely” to move next month with the policy decision set for release less than a week before the November 8 U.S. presidential elections.

Fed fund futures currently price in the chance of a rate hike in November at just 7.2%, according to Investing.com’s Fed Rate Monitor Tool, while odds for a move in December stood at 64.8%.

That was a despite a firm reading on consumer spending. Retail sales rose 0.6% in September, bouncing back from a prior 0.2% decline. Although the increase was in line with forecasts, it still represents a firm reading bolstering hopes over the willingness to buy of the American consumer.

Furthermore, core sales, which corresponds more closely with the consumer spending component of gross domestic product (GDP) also increased after a previous decline. The 0.5% advance in September also beat analyst expectations for a 0.4% increase.

The producer price index (PPI) for September also suggested that price pressures at factory gates were on the rise. The data is relevant because it can be assumed that producers could pass price increases onto the consumer, making the PPI a leading indicator of inflation and fueling speculation that the Fed will tighten monetary policy.

Still, not all the economic news stateside was positive as the University of Michigan’s preliminary reading of consumer sentiment for October unexpectedly dropped to its lowest level since September 2015.

On the company front, JPMorgan (NYSE:JPM) kicked off the third quarter reporting season for banks.

Gains were still subdued in the world’s largest bank, as despite the beat on both the top and bottom line, shares advanced only 0.2%.

Much was the same case for Citigroup (NYSE:C), whose earnings topped consensus, with shares only gaining a meager 0.6%.

Wells Fargo (NYSE:WFC) was the day’s loser after revenue rose less than expected. Shares were down about 0.8%.

Meanwhile, oil prices were trading lower on Friday as investors continued to weigh this week’s surprise build in U.S. crude inventories against a bigger than expected decline in both gasoline and distillate stocks.

Investors were also looking ahead to the latest round of Baker Hughes data. Last week the oilfield services provider said the number of rigs drilling for oil in the U.S. rose by 3 to 428, marking the 14th increase in 15 weeks.

Market participants fear that increases in U.S. production would only serve to bolster the global supply glut, putting downward pressure on prices.

U.S. crude futures fell 0.50% to $50.19 by 11:23AM ET (15:23GMT), while Brent oil lost 0.56% to $51.74.

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