Markets in the US closed down for a third consecutive session yesterday, as the major US Indices lost further gains by the closing bell. The downturn was led by the health-care stocks having another bad day after Wednesdays drop as investors and government officials react to Mylan’s major price increase for their EpiPens. Another major reason for the bear run was due to the lack of investing and trading done on the NYSE. Thursday had the third lowest trading volumes for US stocks in 2016 which lead to the NASDAQ100, S&P 500 and the Dow all down over -0.2%.
With the turbulence of the post Brexit just behind us and the instability of the impending US election ahead of us, this quiet week of trading has let the market catch its breath
Economists and investors alike are holding out for Fed Chair Yellen’s speech today in anticipation of signals on rate hikes and what the rest of 2016 holds for the Fed. The topic of Yellen’s speech is, “The Federal Reserve’s Monetary Policy Toolkit”
With no major signals given out yesterday, the central bankers are being tight lipped on what today’s speech brings. Some chief economists have said she will be dovish in her speech and won’t talk about anything the market really wants to hear. She will probably walk between a dialogue on the policy tools at the Fed’s disposal and current economic environment without swaying towards any comments on Policy decisions.
Yellen knows every word she says can and will be taken as a signal, so she will have to tread carefully to avoid panicking the markets.
With her speech not being televised and no questions afterwards, this will only add to the tension already created by the eerily quiet week in the markets.
Only when the news filters out to us, sometime after 14:00 GMT, will we truly understand the weight of her speech.