Stocks mixed at the open but moved higher into the close
Stocks in the US were mixed at the open with the Nasdaq the only major index in the red. Weaker than expected earnings from technology benchmark Cisco (NASDAQ:CSCO) dragged on the broader index. Most investors were focused on Thursday’s Fed Chair hearings and the question and answer session facing Janet Yellen. Stocks moved higher into the close with all three major indices settling in the black.
On Wednesday, Yellen’s prepared remarks for her Senate Banking Committee confirmation hearings were released. The dovish tone which is in line with Bernanke’s prior comments helped lift the US equity bourses.
Yellen’s prepared remarks were short and seemed to be largely an explanation of the current stance of monetary policy. It seems obvious that she would reiterate that unemployment is too high while inflation is too low. As the Vice Chairman, she also had to be careful about not building up expectations for a change in policy one way or the other, which in the current context means not signaling tapering next month.
Thursday hearing was Yellen’s first public appearance in five months. She has been reportedly an important driver of the evolution of the Fed’s communication innovations. There is no reason to expect her to try to distance herself from the central bank’s actions. At the same time, continuity of Fed policy also means the completion of QE.
After the closing bell on Wednesday Cisco reported their fiscal Q1 results. The company reported that revenue rose just 1.8%, compared with its projection of 3% to 5% growth. Cisco followed up by projecting a decline of 8% to 10% in the current period, an unusually downbeat forecast.
The Nasdaq composite notched up a multi-year high and is poised to test the 4K level for the first time since 2000. Momentum is strong with the MACD poised to generate a buy signal as the spread is closing in on the 9-day moving average of the spread.
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