US stocks drop on jobs data, Yellen's warning on values

GMT 23:36 2015 Wednesday ,06 May

Arab Today, arab today US stocks drop on jobs data, Yellen's warning on values

Wall Street stocks fell for a second straight session Wednesday
New York - AFP

Wall Street stocks fell for a second straight session Wednesday following disappointing jobs data and a warning from Federal Reserve Chair Janet Yellen on high equity valuations.

The Dow Jones Industrial Average dropped 86.22 points (0.48 percent) to 17,841.98.

The broad-based S&P 500 fell 9.31 (0.45 percent) to 2,080.15, while the tech-rich Nasdaq Composite Index lost 19.68 (0.40 percent) at 4,919.64.

Payrolls firm ADP estimated the US added just 169,000 private-sector jobs in April, the second month in a row under 200,000, as the petroleum sector downturn continued to pinch the labor market.

Fed Chair Yellen, addressing a conference on lessons from the 2008 financial crisis, characterized US stock market valuations as "quite high" and said they pose "potential dangers" to financial stability.

Chris Low, chief economist at FTN Financial, said Yellen's remarks suggested she is "pretty eager" to raise ultra-low interest rates despite some disappointing economic data.

"She seems to be hinting that they're going to have to raise rates one way or the other as long as the economy is growing at all," Low said.

Alexion Pharmaceuticals announced it would buy Synageva BioPharma for $8.4 billion, creating a bigger player in treatments for rare diseases. Synageva surged 112.2 percent, while Alexion fell 8.0 percent.

Dow member Microsoft fell 2.8 percent following a Bloomberg report that it is considering a takeover bid for Salesforce, which has a market capitalization near $50 billion. Salesforce rose 1.4 percent.

Payment services company MoneyGram International surged 21.4 percent on reports it is in talks to be acquired by Western Union. Western Union, which rose 4.3 percent, said the reports of the impending deal "are not accurate."

Apparel retailer The Children's Place jumped 7.8 percent after boosting its first-quarter profit forecast from 60-65 cents per share to 81-83 cents per share.

Herbalife, a marketer of nutrition supplements, bolted 16.5 percent higher after first-quarter net income edged up 4.8 percent to $78.2 million despite a $36.3 million charge related to the devaluation of the Venezuelan bolivar.

Bond prices tumbled. The yield on the 10-year US Treasury rose to 2.24 percent from 2.18 percent Tuesday, while the 30-year advanced to 2.99 percent from 2.91 percent. Bond prices and yields move inversely.




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