United States stocks higher as Yellen indicates rate hike soon

In her speech kicking off the Fed's summer retreat, Yellen said that the case for a rate hike "has strengthened in recent months".

Speaking at a three-day worldwide gathering of central bankers and academics in Jackson Hole, Wyoming, Yellen said the "U.S. economy was nearing the Federal Reserve's statutory goals of maximum employment and price stability".

Rupee movement against the dollar, crude oil price movements, manufacturing data and the performance of monsoon rains may influence trading sentiment as the week progresses.

The main-share Philippine Stock Exchange index (PSEi) lost 9.05 points or 0.12 percent to close at 7,845.49, in line with another day of cautious trades across the region.

Bank shares were higher, with Bank of America adding 1.1 percent and Goldman Sachs 0.8 percent.

The case for a USA interest rate hike has strengthened in recent months, Federal Reserve Chair Janet Yellen said on Friday, Aug. 27, in a speech that left the door open for such a move as early as next month.

She did not say when exactly the US central bank might raise rates.

Of possible interest too, just before Yellen's speech the US Treasury yield curve was at its flattest since 2007, according to Bloomberg data. While the door remains open for a September rate hike, market participants do not expect more than one hike before year end.

The markets were satisfied by the lack of surprises in Yellen's remarks, said Tim Drilling, regional investment director of U.S. Bank's Private Client Reserve.

"Anything that's not going to be straight-out dovish is going to be disappointing", she said.

Combined with the 0.8 per cent growth pace in the first quarter, the world's largest economy grew 1 per cent in the first half of this year. "That is very anemic".

A government report released today showed that the US economy has expanded slower than previously estimated in the second quarter, as businesses are running down their inventories faster and state and local governments have reduced their spending.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move.

Design software company Autodesk jumped $5.17, or 8 percent, to $68.87 after reporting a small profit, beating expectations of a loss. AT&T and Verizon each fell about 1 percent. That would be the fourth quarter in a row of drops.

The overall financials group firmed 0.2 percent, while industrials rose 0.5 percent, including gains for railroad stocks.

OIL: Benchmark U.S. crude oil rose 23 cents to $47.56 a barrel.

The dollar rose against the yen to a two-week high of 101.93 yen and was last up 1.3 percent at 101.88 yen. The euro rose to $1.1291 from $1.1285.

Related:

Comments


Other news