US close: Stocks blow hot and cold as Yellen and oil are immiscible
US equities blew hot then cold on Wednesday's session as traders and investors mulled mixed corporate results, plunging oil prices and remarks from Fed chair Janet Yellen.
Dragged down by Disney and IBM, Dow Jones tailed off sharply to lose 0.62% by the close at 15,914.74, while the S&P merely lost the gains it made on the day to finish almost flat at 1,851.86.
The Nasdaq initially rose strongly and managed to hold onto some of those gains, with a day's gain of 0.35% for the composite index to 4,283.59 by the bell, with the Nasdaq 100 up 0.47%.
Stocks initially rallied as the Federal Reserve Chair flagged risks to the economy that could delay another increase in interest rates.
In her semiannual testimony to Congress on US monetary policy, Yellen said financial conditions have become less supportive of economic growth, the slowdown in China could weigh further on the US and the outlook for inflation is falling.
Without stating it specifically, her remarks were seen to suggest the next hike to interest rates may be a long way off.
“Financial conditions in the United States have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar,” Yellen said.
“These developments, if they persist, could weigh on the outlook for economic activity and the labor market, although declines in longer-term interest rates and oil prices provide some offset.”
Several economists still insisted that a March rate rise could happen as Yellen's words had by no means closed the door to a March hike.
"[The testimony] reveals that, while the FOMC might not be ready to raise rates a second time in March, it still anticipates a “gradual” series of rate hikes over the next couple of years. That view is clearly at odds with futures markets, which imply that almost any additional rate hikes are now off the table," said Paul Ashworth, chief US economist, Capital Economics.
Meanwhile, oil prices tumbled, with West Texas Intermediate crude down by more than 2% to $27.33 by 2200 GMT.
Earlier in the session, Goldman Sachs repeated its warning that crude oil futures might fall below $20 per barrel in 2016, while analysts at Morgan Stanley said rebalancing may not come until mid-2017.
In company news, Disney fell despite the success of Star Wars boosting earnings to their highest ever level, as concerns mounted about subscriber numbers and sports rights spending at its cable sports network ESPN.
IBM was another large weight on the Dow, as Charles Munger, the vice chairman at Warren Buffett’s Berkshire Hathaway, said "the jury is out" on IBM's prospects.
After the closing bell, Amazon impressed with the announcement of a new $5bn stock buyback, while Twitter's after-hours results showed revenues in line and earnings beating forecasts despite flat average monthly user numbers.
Also Tesla surged despite missing revenue estimates and delivering a loss per share when a profit was expected. The electric car and Powerwall maker said it would be net cash flow positive in 2016 and said it would not need to raise any new cash this year.
S&P 500 - Risers
Akamai Technologies Inc. (AKAM) $47.98 +21.25%
Sealed Air Corp. (SEE) $43.63 +7.91%
Williams Companies Inc. (WMB) $12.85 +7.26%
Henry Schein Inc. (HSIC) $156.75 +6.18%
Activision Blizzard Inc. (ATVI) $30.15 +4.65%
Hanesbrands Inc. (HBI) $25.04 +4.20%
Priceline Group Inc (PCLN) $1,032.77 +4.18%
Mead Johnson Nutrition Co. (MJN) $70.72 +4.12%
Goodyear Tire & Rubber Co. (GT) $28.58 +4.12%
Snap On Inc. (SNA) $141.36 +4.11%
S&P 500 - Fallers
Assurant Inc. (AIZ) $66.23 -13.41%
Chesapeake Energy Corp. (CHK) $1.70 -12.82%
Computer Sciences Corp. (CSC) $27.72 -10.00%
Murphy Oil Corp. (MUR) $16.76 -6.16%
Rowan Companies plc (RDC) $11.27 -5.53%
Pentair plc (PNR) $42.88 -5.13%
Time Warner Inc. (TWX) $60.07 -4.97%
Devon Energy Corp. (DVN) $21.63 -4.55%
Viacom Inc. Class B (VIAB) $31.38 -4.50%
Monsanto Co. (MON) $87.58 -4.49%
Dow Jones I.A - Risers
Nike Inc. (NKE) $57.41 +3.11%
Visa Inc. (V) $70.15 +2.66%
Unitedhealth Group Inc. (UNH) $112.74 +1.42%
Pfizer Inc. (PFE) $29.49 +1.34%
Microsoft Corp. (MSFT) $49.71 +0.87%
Merck & Co. Inc. (MRK) $49.53 +0.75%
McDonald's Corp. (MCD) $117.54 +0.45%
Home Depot Inc. (HD) $114.33 +0.41%
Chevron Corp. (CVX) $83.04 +0.14%
General Electric Co. (GE) $28.30 +0.07%
Dow Jones I.A - Fallers
Walt Disney Co. (DIS) $88.85 -3.76%
International Business Machines Corp. (IBM) $120.19 -3.13%
Caterpillar Inc. (CAT) $62.14 -2.80%
Boeing Co. (BA) $116.36 -2.12%
Intel Corp. (INTC) $28.23 -2.01%
E.I. du Pont de Nemours and Co. (DD) $57.91 -1.98%
Coca-Cola Co. (KO) $42.55 -1.73%
3M Co. (MMM) $152.45 -1.48%
Procter & Gamble Co. (PG) $81.62 -1.23%
JP Morgan Chase & Co. (JPM) $55.52 -1.21%
Nasdaq 100 - Risers
Akamai Technologies Inc. (AKAM) $47.98 +21.25%
Henry Schein Inc. (HSIC) $156.75 +6.18%
Activision Blizzard Inc. (ATVI) $30.15 +4.65%
Priceline Group Inc (PCLN) $1,032.77 +4.18%
Vimpelcom Ltd Ads (VIP) $3.40 +3.66%
Intuitive Surgical Inc. (ISRG) $524.41 +3.06%
Biomarin Pharmaceutical Inc. (BMRN) $67.02 +2.93%
Netflix Inc. (NFLX) $88.45 +2.69%
Seagate Technology Plc (STX) $30.19 +2.65%
Celgene Corp. (CELG) $103.16 +2.65%
Nasdaq 100 - Fallers
Viacom Inc. Class B (VIAB) $31.38 -4.50%
Comcast Corp. (CMCSA) $55.81 -4.12%
Tesla Motors Inc (TSLA) $143.67 -3.09%
Mattel Inc. (MAT) $30.25 -2.95%
Fastenal Co. (FAST) $42.27 -2.51%
Charter Communications Inc. (CHTR) $161.08 -2.40%
Dish Network Corp. (DISH) $39.71 -2.38%
Endo International Plc (ENDP) $51.00 -2.34%
PACCAR Inc. (PCAR) $48.73 -2.23%
Intel Corp. (INTC) $28.23 -2.01%