US stocks open flat ahead of FedComment on this story
New York - U.S. stocks were little changed, after the Standard & Poor’s 500 Index reached a record, as investors awaited a speech by Federal Reserve Chair Janet Yellen for clues on the timing of higher interest rates.
The S&P 500 fell less than 0.1 percent to 1,991.43 at 9:31 a.m. in New York. The benchmark gauge is within 10 points of the 2,000 milestone and is heading for a 1.9 percent weekly increase.
“With very little corporate or economic news due elsewhere, her comments are likely to have the full attention of investors,” Richard Hunter, the head of equities at Hargreaves Lansdown Plc in London, wrote in an e-mail, referring to Yellen’s speech. “More recent strength in economic data, and Fed minutes which implied that the U.S. economic recovery is becoming established, both point to a potential rate hike slightly earlier than widely expected.”
Optimism that the Fed will support a recovering economy sent the S&P 500 to an all-time closing high of 1,992.37 yesterday. Data from housing to manufacturing indicated that the world’s largest economy continues to strengthen. Yellen speaks today in Jackson Hole, Wyoming, at a Fed symposium also being attended by European Central Bank President Mario Draghi.
Minutes from the Fed’s July meeting released earlier this week reinforced the central bank’s commitment to supporting the recovery even as some policy makers indicated a willingness to raise rates sooner than anticipated.
Fed Bank of St. Louis President James Bullard said the U.S. central bank may begin tightening monetary policy earlier than officials previously expected, while Atlanta Fed President Dennis Lockhart urged more patience.
“The evidence is leading toward an earlier increase than would have been in the works earlier this year,” Bullard said in an interview yesterday with Kathleen Hays on Bloomberg Radio in Jackson Hole. “Labor markets have improved quite a bit relative to what the committee was thinking.”
Atlanta’s Lockhart, who spoke in a separate Bloomberg Radio interview yesterday, still warned of the risk of “moving prematurely and snuffing out some progress.”
Yellen has highlighted uneven progress in the labor market in making the case for further accommodation.
Draghi will also speak in Wyoming, amid mounting speculation European policy makers will enact more stimulus. A report yesterday showed Markit’s euro-area manufacturing and services indexes dropped in August. In June, the ECB introduced targeted long-term refinancing operations to improve bank lending in the non-financial private sector.
Three rounds of Fed stimulus and better-than-projected corporate earnings have helped the S&P 500 almost triple since its low in March 2009. The gauge has climbed for the past four days, the longest streak since June 20, and is heading for its biggest weekly gain since April. The S&P 500 has not had a decline of 10 percent in almost three years. It trades at 17.8 times the reported earnings of its companies, near the highest level since 2010.
The S&P 500 has rebounded 4.3 percent from a two-month low on Aug. 7, bolstered by easing tensions in Ukraine and speculation that central banks will keep interest rates low.
Equity futures slipped earlier today as tensions flared again in Eastern Europe. Trucks carrying humanitarian aid from Russia crossed the border to Ukraine, which said the move amounted to an invasion as the convoy moved without its consent. Valentyn Nalyvaychenko, the head of Ukraine’s security council, said Russia is invading under the cover of the aid trucks, according to the Interfax news service.