US stocks responded positively to the Federal Reserve chairman, Janet Yellen, testimony to Congress on Wednesday closing broadly up.
All three major stock indexes made gains jolted by Yellen's indication of gradual rate rises. However, she also said the Fed would watch inflation which is still below its 2% target.
- Dow 21,532 +0.58%
- S&P 500 2,443 +0.73%
- Nasdaq 6,261 +1.10%
- Russell 2000 1,424 +0.80%
- NYSE Composite 11,825 +0.69%
- Gold 1,219.4 +0.39%
- Oil WTI $47.64 +0.25%
- 10-Year Treasury Yield 2.33% -0.04
Tightening labour market
The beige book data for June on the labour market released by Federal Reserve showed modest economic growth. Some industries suffered a shortage of workers and the report indicated that while "wage pressures" were in line with emploment conditions this did not yet produce "upward pressure of prices and wages".
Dow shot up to a new jumping +123 points or +0.58%, the S&P 500 moved 17.75 points or +0.73% while the Nasdaq went up 67 points or +1.10%.
Crude oil stockpiles are falling sending oil prices up a notch, but investors still remain cautious over glut concerns. US inventories were slashed by 7.6 mn barrels according to US Energy Information Administration. Global benchmark, brent crude went up by 22 cents or 0.5%. Energy shares rebounded as a result.
Gains were made across the board with many industry groups advancing. Renewable energy equipment up +5.26%, toys up +2.88% and consumer electronics +2.51% were among the leaders.
While laggards included industrial suppliers (-2.51%), nonferrous materials (-2.35%) and aluminum (-1.49%).
In focus: Energy
Power generation utility company, NRG Energy, was a big mover climbing +29.39% to $21.09. The stock has had a sharply rising five-day change of +25.54%.
Under pressure from two activist investors, the company announced its detailed transformation plan Wednesday morning stating that the majority of its targets and results 'were achievable by the end of 2018".
The company would divest businesses, streamlining operations and cut operational costs. NRG is targeting $2.5 - $4 bn sale of it assets including 50-100% of its renewables platforms and interest in NRG Yield, a dividend generating company that owns a diversified portfolio of contracted renewable and conventional generation and thermal infrastructure assets in the U.S.
Meanwhile Bank of Canada raised its interest rate for the first time in seven years to 0.75% causing the Canadian dollar to rise sharply.