Wall Street stocks edge lower, bank stocks rise
US stocks closed mostly lower today, after the Federal Reserve, in an unusual statement, singled out the valuation of social media and biotechnology shares as "substantially stretched."
Bond prices were flat but gold fell as comments by Fed Chair Janet Yellen suggested that interest rates hikes could come sooner than anticipated if the labor market continued to improve.
Separately, oil prices tumbled amid rising supply from Libya.
On Wall Street, bank stocks provided some support and put the Dow into slightly positive territory. JPMorgan Chase & Co and Goldman Sachs outperformed after reporting strong results.
The Dow Jones industrial average rose 5.26 points, or 0.03 percent, to 17,060.68, the S&P 500 lost 3.82 points, or 0.19 percent, to 1,973.28, and the Nasdaq Composite dropped 24.03 points, or 0.54 percent, to 4,416.39.
Social media and biotechnology shares slumped following the release of the report, with the Nasdaq Biotech Index down 2.3 percent.
Overall, Yellen said the US economic recovery was incomplete and she defended the central bank's accommodative monetary policies.
Bond yields initially rose after her comments, but the US 10-year Treasury note ended essentially flat, dipping 1/32 of a point in price to yield 2.554 percent.
Gold prices fell 1 percent and are down more than 3 percent this week. Copper rose 0.1 percent.
US crude oil fell 0.9 percent to $100.01 per barrel. Brent crude lost 1 percent as rising supplies from Libya overshadowed renewed violence in the country.
European stocks fell as declining investor morale hit Germany's benchmark DAX equity index and lingering worries over Portuguese bank BES weakened the Lisbon stock market.
The declines on the DAX and Lisbon's PSI-20 equity index contributed to a retreat by the region's stock markets on Tuesday from the multi-year highs they reached in late June.
The DAX fell 0.5 percent to 9,730.14 points, down from its record high of 10,050.98 points in late June.The pan-European FTSEurofirst 300 index fell 0.4 percent to 1,358.31 points, while the euro zone's blue-chip Euro STOXX 50 index closed 1 percent lower at 3,153.75 points.
Meanwhile, Japan's Nikkei share average climbed to a 1-1/2-week high after Citigroup's strong earnings and a merger and acquisition deal in the US healthcare industry lifted sentiment.
The Bank of Japan's policy meeting outcome got a muted reaction from the market. Investors are focused on BOJ Governor Haruhiko Kuroda's speech after the market close. The Nikkei ended 0.6 percent higher to 15,395.16, the highest closing level since July 4.The broader Topix gained 0.7 percent to 1,273.68 and the JPX-Nikkei Index 400 advanced 0.7 percent to 11,588.42.