Stocks Open Higher as Yellen Eases Fears About Economy
Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice. Money does not offer advisory services.
U.S. stocks opened higher on Friday, a day after Federal Reserve Chair Janet Yellen said she expects interest rates to be raised this year, easing concerns about slowing global growth.
Nike's surprisingly strong results in China and data showing that the U.S. economy expanded more than previously estimated in the second quarter added to the positive tone.
Markets have been skittish since last Thursday, when Yellen cited concerns about slowing growth as a key reason for holding off from a much-anticipated hike. Since then, the S&P 500 had fallen about 3 percent through Thursday's close.
Yellen said she and other policymakers do not expect recent global economic and financial market developments to significantly affect the central bank's policy.
"There is some optimism after Yellen's speech," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.
"She has raised the prospect of a December rate hike pretty high because the issues the Fed listed at its last meeting for not raising aren't going to go away in the next six weeks."
Federal fund futures contracts showed traders were pricing in more than a 50% chance of a rate hike by the end of this year.
At 9:36 a.m. ET (1336 GMT) the Dow Jones industrial average was up 171.14 points, or 1.06%, at 16,372.46. The S&P 500 was up 13.02 points, or 0.67%, at 1,945.26 and the Nasdaq composite was up 33.33 points, or 0.7%, at 4,767.81.
The CBOE Volatility index, known as Wall Street's "fear gauge", fell 7.7% to 21.69, but remained above its long-term average of 20.
Nike jumped 8% to a record high of $123.94, giving the biggest boost to the Dow and the S&P. The company's quarterly profit topped expectations on strong growth in China.
All 10 major S&P sectors were higher, led by the financial index's 1.28% gain. Bank stocks rose after Yellen's comments.
Bank of America, JPMorgan, Citigroup and Wells Fargo were up between 1.4 percent and 2.2 percent.
Apple was up 1.2 percent at $116.37 as its new iPhones went on sale on Friday.
Pier 1 Imports slumped 17.4 percent to an almost 5-year low of $7.21 after the home decor and furniture importer's results missed expectations.
Data on Friday showed stronger construction and consumer spending helped U.S. gross domestic product rise at a 3.9-percent annual pace in the April-June quarter, up from the 3.7-percent pace reported last month.
Consumer sentiment is expected to rise to 86.7 in September, compared with the preliminary reading of 85.7. The data is expected at 10 a.m.
Advancing issues outnumbered decliners on the NYSE by 2,010 to 633. On the Nasdaq, 1,739 issues rose and 529 fell.
The S&P 500 index showed two new 52-week highs and two new lows, while the Nasdaq recorded 29 new highs and 13 new lows.
--Additional reporting by Abhiram Nandakumar
