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Overnight Markets: S&P 500 and Nasdaq dip on Yellen's comments

by Himanshu Singh on Jul 16, 2014 at 03:26

Overnight Markets: S&P 500 and Nasdaq dip on Yellen's comments

The Standard & Poor’s 500 and the Nasdaq declined on Tuesday after Federal Reserve Chair Janet Yellen and her fellow Fed policymakers raised concerns about "substantially stretched valuations" in some sectors.

The Dow Jones industrial average rose five points or 0.03%, to end at 17,061, not far below the record closing high of 17,068 set on July 3. The S&P 500 slipped four points or 0.19%, to 1,973, about 12 points below its record closing high of 1,985 set on July 3. The Nasdaq Composite dropped 24 points or 0.54%, to close at 4,416.

In the monetary policy report accompanying her congressional testimony, Yellen said that "equity valuations of smaller firms as well as social media and biotechnology firms appear to be stretched".

Social media shares declined, with Facebook tumbling 1.1% and Twitter Inc sliding 1.1%.

According to the BofA Merrill Lynch Fund Manager Survey for July, 61% of global asset managers are overweight equities, the highest reading since early 2011, but 21% see stock markets as overvalued, the highest reading since 2000.

BlackBerry's US-listed shares plunged 4% after the bell following news that International Business Machines Corp will partner exclusively with Apple Inc to sell iPhones and iPads loaded with applications intended to serve corporate clients.

After the bell, IBM's stock rose 1.9% and Apple shares gained 1.3%. Shares of Yahoo Inc rose 2.7% in extended-hours trading after the Internet company reported a decline in second-quarter net revenue.

During the regular session, shares of JP Morgan Chase & Co surged 3.5% and helped lift the Dow. The stock rallied after JP Morgan reported a drop in second-quarter profit, although the profit exceeded the average analysts' estimate.

Shares of Goldman Sachs Group Inc (GS.N) gained 1.3% after the company reported a 5% increase in second-quarter profit.

On the downside, Johnson & Johnson, another Dow component, fell 2% after it reported higher-than-expected quarterly results, but cautioned that the new pill Olysio, a new treatment for hepatitis C, will lose momentum later this year as new rivals come to market.

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