U.S. stocks were drifting between small gains and losses in late-afternoon trading Wednesday as investors weighed the implications of the Federal Reserve’s latest signals on interest rates. In her semiannual report to Congress, Fed Chair Janet Yellen said the central bank would likely move more slowly to raise interest rates if the economy disappoints.
KEEPING SCORE: The Dow Jones industrial average rose one point to 16,015 as of 3:01 p.m. Eastern Time. The Standard & Poor’s 500 gained 11 points, or 0.6 percent, to 1,863. The Nasdaq composite added 49 points, or 1.2 percent, to 4,317. Stocks are coming off a three-day losing streak.
THE FED SPEAKS: Yellen offered no major surprises in prepared remarks released before the start of her two-day Congressional testimony. She reiterated the Fed’s confidence that the U.S. economy was on track for stronger growth and a rebound in inflation. At the same time, she acknowledged the weaker economic data reported since the start of the year and made it clear the Fed is closely monitoring greater risks from abroad. Since the Fed decided to raise its key interest rate from a record low in December, the U.S. economy has hit some turbulence and markets have become volatile.
THE QUOTE: The message from the Fed is what investors wanted to hear, said Erik Davidson, chief investment officer for Wells Fargo Private Bank.
“The markets have gotten the message that the Fed is not on autopilot,” Davidson said. “If they’d gotten the sense that the Fed was on autopilot and was predestined to a certain number of rate hikes in 2016, that would have been troublesome.”
SECTOR VIEW: Six of the 10 sectors in the S&P 500 index moved higher, led by health care stocks. Materials stocks were the biggest decliners.
GAINERS & LOSERS: Akamai Technologies surged 22.3 percent, the biggest gainer in the S&P 500 index. The stock added $8.84 to $48.41. Assurant fell the most. The stock lost $10.34, or 13.5 percent, to $66.09.
THEY SAID YES: Staples rose 1.2 percent after the retailer received European approval for its buyout of rival Office Depot. In exchange for the approval, Staples said it would split off some operations in Europe to allay regulatory concerns. The $6.3 billion deal still needs approval in Canada and in the U.S. Staples added 10 cents to $8.50.
MEDIA MESS: Several big media companies slumped. Disney dropped 3.3 percent a day after it reported that its ESPN network has hit a soft patch. The stock was the biggest decliner in the Dow, sliding $3.03 to $89.30. Time Warner was down 4 percent after its revenue fell short of forecasts. Time Warner shed $2.54 to $60.69.
OVERSEAS: In Europe, Germany’s DAX added 1.6 percent, while France’s CAC 40 rose 1.6 percent. Britain’s FTSE 100 gained 0.7 percent. In Asia, Japan’s Nikkei 225 sank 2.3 percent and is down about 11 percent in the past month. Australia’s S&P/ASX 200 shed 1.2 percent. Markets were closed in China, Taiwan, Hong Kong and South Korea for Lunar New Year holidays. Hong Kong and Korea reopen on Thursday and China and Taiwan resume trading on Monday.
ENERGY: Benchmark U.S. crude fell 49 cents, or 1.8 percent, to close at $27.45 a barrel in New York. Brent crude, a benchmark for international oils, rose 52 cents, or 1.7 percent, to close at $30.84 a barrel in London.
METALS: Precious metals prices closed lower. Gold fell $4, or 0.3 percent, to $1,194.60 an ounce and silver slid 17 cents, or 1.1 percent, to $15.28 an ounce. Copper, an industrial metal that will often rise and fall along with investor’s optimism about the global economy, fell 1 cent, or 0.6 percent, to $2.03 a pound.
BONDS AND CURRENCIES: Bond prices rose. The yield on the 10-year Treasury slipped to 1.72 percent from 1.73 percent late Tuesday. The dollar fell to 113.80 yen from 114.95 yen, while the euro fell to $1.1274 from $1.1289 the day before.