US close: Stocks rise as Yellen argues benefits of tight labour market

Wall Street finished slightly higher on Friday as Federal Reserve chair Janet Yellen said she sees some benefit to allowing inflation to run above the central bank’s 2% target..

The Dow Jones Industrial Average increased 0.22% to 18,138.38 points, the S&P 500 rose 0.02% to 2,132.98 points and the Nasdaq grew 0.02% to 5,214.16 points.

Nevertheless, the S&P 500 closed with its first back-to-back weekly loss since August and 2.6% below the peak it hit that month.

In contrast, oil prices fell as the dollar strengthened and data from Baker Hughes showed US drillers added four rigs in the week to 14 October.

West Texas Intermediate crude dropped 0.17 cents to $50.35 per barrel and Brent dipped 0.07% to $51.99 per barrel at 2141 BST.

The yield on the benchmark 10-year US Treasury finished six basis point higher at 1.80%.

The dollar rose 0.40% versus the pound, 0.75% against the euro and 0.43% against the yen. A stronger dollar makes oil more expensive for importers trading in other currencies.

In a speech at the Boston Fed conference, Yellen said it may be wise to run a “high pressure” economy with a tight labour market to reverse some of the negative effects of the Great Recession.

On the data front, US retail sales rose 0.6% in September, as expected by analysts, following a revised 0.2% fall in August, the Commerce Department revealed.

Elsewhere, a survey from the University of Michigan found consumer sentiment in the US unexpectedly deteriorated in October, dropping to its lowest level since last September and the second-lowest in the past two years.

The preliminary reading of the consumer sentiment index fell to 87.9 from 91.2 in September and 90.0 in October last year. Economists had been expecting a reading of 91.9.

Earlier, Chinese data gave global stocks a boost as it improved more than forecast.

China’s consumer price index rose 1.9% year-on-year in September following a 1.3% increase in August. Economists had pencilled in a 1.6% gain.

Producer prices climbed 0.1% last month, beating forecasts for a 0.4% drop and following August’s 0.8% decline.
Meanwhile, US earnings were in focus.

JP Morgan Chase shares snapped an earlier rally as it reported quarterly earnings and revenue that beat expectations.

Wells Fargo also erased gains as a sales-tactics scandal that led to the departure of the company’s CEO John Stumpf earlier this week overshadowed its better-than-expected third quarter results.

Shares of Citigroup on the other hand edged up after posting a third-quarter net income figure of $3.84bn, or $1.24 a share, while revenues declined 5% to $17.76n. Analysts had projected EPS of $1.16 per share on income of $17.36bn.

Goldman Sachs gained after winning a court case linked to the losses of a Libyan-government investment fund.

HP Inc. slumped after issuing a cautious outlook and announcing plans to cut 3,000 to 4,000 employees.

Salesforce.com Inc. gained following reports that the company has withdrawn interest in buying Twitter Inc.

From a sector standpoint, the best performing industrial groups were: Platinum and precious metals (2.61%), Paper (2.09%) and Investment services (1.38%).

Dow Jones - Risers

Goldman Sachs Group Inc. (GS) $170.61 1.85%
E.I. du Pont de Nemours and Co. (DD) $69.04 1.31%
Intel Corp. (INTC) $37.45 1.30%
Microsoft Corp. (MSFT) $57.42 0.88%
Caterpillar Inc. (CAT) $87.69 0.80%
Visa Inc. (V) $82.47 0.71%
Apple Inc. (AAPL) $117.66 0.58%
International Business Machines Corp. (IBM) $154.47 0.47%
General Electric Co. (GE) $28.88 0.42%
Wal-Mart Stores Inc. (WMT) $68.45 0.32%