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While you were sleeping: Yellen to speak

Thursday 19th January 2017

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US Treasuries declined while Wall Street was mixed as investors awaited a speech by US Federal Reserve Chair Janet Yellen.

Investors will eye Yellen, who is set to speak later in the day, for any fresh clues on the pace of interest rate increases this year. 

Meanwhile, shares of Target dropped, trading 6 percent weaker as of 1.13pm in New York, after the company downgraded its fourth-quarter earnings sales forecast because of disappointing holiday sales. 

"While we were pleased with Black Friday sales, December digital sales growth of more than 40 percent and continued strength in our Signature Categories, these results were offset by early season sales softness and disappointing traffic and sales trends in our stores," Brian Cornell, CEO of Target, said in a statement.

While both Citigroup and Goldman Sachs posted quarterly earnings that beat expectations, their stocks also moved lower. Shares of Citigroup traded 1.4 percent weaker as of 1.22pm in New York, while those of Goldman Sachs declined 0.8 percent.

Their outlook remained upbeat.

“The benefits from higher interest rates, accelerating capital deployment and historically low credit costs have been evident throughout the large-cap US bank earnings releases,” Marty Mosby, an analyst at Vining-Sparks IBG, said in a note, according to Bloomberg. “The fundamental story remains intact.”

Wall Street was mixed. In 1.14pm trading in New York, the Dow Jones Industrial Average fell 0.2 percent, while the Nasdaq Composite Index was little changed. In 12.59pm trading, the Standard & Poor’s 500 Index slipped 0.1 percent. 

US Treasuries weakened, sending yields on the 10-year note four basis points higher to 2.37 percent.

The Dow moved lower as slides in shares of UnitedHealth and those of Exxon Mobil, recently 2.8 percent and 1.3 percent weaker respectively, outweighed advances in shares of 3M and those of American Express, up 1 percent and 0.7 percent respectively. 

In Europe, the Stoxx 600 Index finished the day with a 0.2 percent increase from the previous close. The UK’s FTSE 100 Index added 0.4 percent, while Germany’s DAX Index rose 0.5 percent. 

France’s CAC 40 Index fell 0.1 percent.

Even so profit warnings weighed on some stocks. Pearson plummeted 29 percent after the world’s largest education company cut its full-year profit forecast and withdrew its 2018 guidance. It also said it plans to sell its stake in Penguin Random House. 

Shares of Premier Foods, the maker of Mr Kipling and Bisto, sank 10 percent after the UK company downgraded its full-year earnings outlook because of weaker third-quarter sales.

Sales fell 1 percent to 251.4 million pounds (US$310 million) in the quarter ended December 31, the company said in a statement. As a result, Premier Foods said it now predicts its 2016-17 full-year trading profit to be about 10 percent below previous expectations. 

“Grocery categories have been affected by changing retailer promotional strategies, notably a reduction in multi-buy promotions which has the effect of reducing category volumes,” Premier Foods said in the statement.

BusinessDesk.co.nz

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