December 9, 2013
Wall Street gains on Yellen boost, Washington eyed
US stocks edged up today, with the S&P 500 bouncing back after its largest drop since August, on expectations Janet Yellen will be tapped to head the US Federal Reserve.
At the close, the Dow Jones industrial average was up 26.84 points, or 0.18 percent, at 14,803.37. The Standard & Poor's 500 Index was up 1.03 points, or 0.06 percent, at 1,656.48. The Nasdaq Composite Index was down 17.06 points, or 0.46 percent, at 3,677.78.
Investors kept an eye on the political stalemate in Washington, which may impact the fiscal standing of the United States and its economic recovery.
European shares steadied with one-month lows attracting buyers and with investors balancing the continued US fiscal deadlock against expectations of continuity from the new Federal Reserve head.
Lack of progress in the US political deadlock kept a lid on gains. US President Barack Obama said he would only negotiate with Republicans once they agree to re-open federal government, now in its second week of shutdown, and raise the debt ceiling with no conditions.
However, investors cheered the removal of one uncertainty, with news that Janet Yellen will be nominated to take over from Ben Bernanke at the Fed next year, bolstering expectations the US central bank will tread carefully in unwinding equity-friendly stimulus.
The FTSEurofirst 300 index was flat at 1,231.24 points, recovering from an earlier one-month low of 1,226.80 and taking heart from US futures pointing to a higher open on Wall Street.
The recovery from the lows comes after the index, along with the broader STOXX Europe 600 - last at 306.82 points - moved into oversold territory on the seven-day relative strength indicator (RSI). But technical analysts said it was too soon to call a bottom.
Spanish and Italian bourses led the gainers, with sentiment on those markets lifted by solid demand for their sovereign debt.
On the downside, investors remained concerned that the third quarter earnings season - which started in the United States this week and kicks off in Europe later this month - could bring disappointments on both numbers and outlook.
Earnings concerns were among the factors that prompted Morgan Stanley to downgrade building materials group Saint Gobain to 'underweight', sending shares 3.3 percent lower.
Meanwhile, Japan's Nikkei share average recovered from a five-week low and gained 1 percent helped by news that President Barack Obama has tapped Federal Reserve Vice Chair Janet Yellen to head the US central bank.
The news removed some uncertainty hanging over the market and helped risk appetite, weakening the yen against the dollar. The Nikkei closed up at 14,037.84, after falling as low as 13,751.85 in the morning session. That was just above a five-week low of 13,748.94 hit on Tuesday. The broader Topix gained 1.5 percent to 1,166.90.