After Market: Yellen Talks of Frothiness, Stocks Head Downward
Wall Street was on a see-saw Tuesday as it weighed strong bank earnings against words of caution from the Fed. Janet Yellen rattled the markets with an unusual comment saying biotech and social media stocks have gotten frothy of late. That sent some shares lower.
By the end of the day the Dow Jones industrial average (^DJI) had gained 5 points, but the Nasdaq composite (^IXIC) fell 24 and the Standard & Poor's 500 index (^GPSC) was down by 3 points.
Social media stocks got a slap in the face from the Fed comments and many closed lower. Yelp (YELP) was down almost 3 percent, while Facebook (FB), Twitter (TWTR), Groupon (GRPN) all fell around 1 percent. Biotech stocks, many of them penny stocks, were also sharply lower.
On the flip side, the banks had a good day thanks to strong earnings reports. JPMorgan Chase (JPM) was the second major commercial bank this week to beat on earnings expectations, even though it posted a decline in profit for the last quarter. The stock gained more than 3.5 percent.
A pickup in investment banking revenue helped Goldman Sachs (GS) post a 5 percent profit for the quarter and the stock gained more than 1 percent.
Another bank -- Comerica (CMA) -- also beat on earnings, and its stock gained more than 2.5 percent.
And the earnings parade marched on: The world's largest health care product company Johnson & Johnson (JNJ) fell 2 percent despite beating on earnings and raising its forecast. This could be a classic case of buy on the rumor, sell on the news.
GoPro (GPRO) rebounded on Tuesday after a heavy bout of selling on Monday. The stock gained 13 percent after JPM Securities initiated coverage with a buy rating.
Fashion king Michael Kors (KORS) was not in vogue today. Shares fell more than 7 percent after analysts at Sterne Agee expressed concern about the company's margins and sales in Europe.
Another big loser on the day was tobacco firm Lorillard (LO), down 10.5 percent after announcing it would be bought by rival Reynolds American (RAI), which also fell almost 7 percent.
Apollo Group (APOL), which owns several for-profit educational institutions fell 2 percent on news the Department of Education is investigating the financial aid programs at the company's University of Phoenix.
And one of the top gainers on the day was oil and gas exploration company Anadarko (APC). It gained 3.5 percent after several positive announcements.
-Produced by Karina Huber.
What to Watch Wednesday:
- The Labor Department releases the Producer Price Index for June, 8:30 a.m. Eastern time.
- The Federal Reserve releases industrial production for June at 9:15 a.m.
- The National Association of Home Builders releases its July housing market index at 10 a.m.
- The Federal Reserve releases its survey of recent economic conditions across the country, known as the Beige Book, at 2 p.m.
- Abbott Laboratories (ABT)
- Bank of America (BAC)
- BlackRock (BLK)
- Charles Schwab (SCHW)
- EBay (EBAY)
- Las Vegas Sands (LVS)
- PNC Financial Services (PNC)
- U.S. Bancorp (USB)
- United Rentals (URI)
- Yum Brands (YUM)