Stock markets around the world shifted into neutral on Tuesday, and U.S. indexes edged lower in early trading a day after setting record highs. Bond yields climbed after Federal Reserve Chair Janet Yellen told Congress that the U.S. central bank is still on track for more interest rate increases and understands the risk of waiting too long to raise borrowing rates.
The S&P 500 fell 5 points, or 0.2%, to 2,323 as of 10:45 a.m. Eastern time. The Dow Jones industrial average slipped 16 points, or 0.1%, to 20,395. The Nasdaq composite fell 12 points, or 0.2%, to 5,751. The Russell 2000 index of smaller U.S. stocks fell 2 points, or 0.1%, to 1,390. Roughly two stocks fell for every one that rose on the New York Stock Exchange.
TAKING A PAUSE: Indexes are stalling after a strong run driven by stronger-than-expected corporate earnings, an improving economy and expectations for more help for businesses from Washington. On Monday, the S&P 500 and the Nasdaq composite each rose for the fifth straight day and set records. The S&P 500 is up 8.6% since the November election, and the Nasdaq has surged 11%.
FED WATCH: Yellen, in her first testimony before Congress since President Trump took office, said the Fed recognizes that sharp changes in fiscal policy could influence the Fed’s decisions, referring implicitly to the ambitious economic program Trump has promised. Many economists think Trump’s stimulus program could put pressure on the Fed to tighten credit more quickly to stave off inflation. The central bank raised rates in December for just the second time in a decade.
Read more: Yellen signals more interest rate hikes are coming »
INFLATION GAUGE: Inflation has been low across the world for years, but a sharp pickup could force the Federal Reserve to raise rates even more quickly. A government report released Tuesday showed that inflation at the wholesale level was 1.6% in January compared with prices a year earlier. That was in line with expectations of economists, who say overall inflation appears to still be in check.
BOND YIELDS: U.S. government bond prices fell after Yellen’s comments as investors anticipated more interest rate increases. The yield on the 10-year Treasury note rose to 2.50%, up from 2.43%, late Monday. The yield on the 2-year Treasury rose to 1.24% from 1.21%.
BABY, YOU CAN BUY MY CAR COMPANY: General Motors jumped 4% to $37.04 after news that France’s PSA Group, maker of Peugeot and Citroen cars, is exploring a deal to buy Opel, GM’s money-losing European business.
CANCEL MY ORDER: Popeye’s Louisiana Kitchen slumped 5.5% to $66.96, giving back most of the previous day’s gain. The stock jumped 7.2% Monday after Reuters said Restaurant Brands International, the parent of Burger King and Tim Horton’s, approached the chicken chain and might buy it. The New York Post reported Tuesday that Restaurant Brands considered a deal a few months ago but lost interest.
Restaurant Brands was down 0.8% to $53.42. It had jumped 4.6% on Monday.
MAJOR LASERS: Cynosure, which makes devices used in laser body contouring, hair removal and skin care, soared 28% to $65.90 after agreeing to be bought by medical device maker Hologic. Hologic is to pay $66 a share, or $1.57 billion, for Cynosure, which had about $434 million in revenue in 2016. Hologic shares fell 3.4% to $38.65.
That’s the second day in a row that a large healthcare company agreed to buy a laser aesthetics company. On Monday, Allergan agreed to buy Zeltiq Aesthetics for $2.48 billion.
COMMODITY REBOUND: Benchmark U.S. crude oil rose 64 cents to $53.56 per barrel. On Monday it fell 93 cents. Brent crude, the international standard, rose 75 cents to $56.33 per barrel.
Natural gas fell a penny to $2.93 per 1,000 cubic feet.
Gold rose $8.20 to $1,234.00 per ounce, silver rose 16 cents to $17.98 per ounce and copper slipped a penny to $2.77 per pound.
CURRENCIES: The dollar held steady at 113.62 Japanese yen. The euro rose to $1.0616 from $1.0600 late Monday, and the British pound fell to $1.2471 from $1.2529.
GLOBAL MARKETS: Stocks were relatively steady across the world. In Europe, the German DAX index slipped 0.1%, while the French CAC 40 and British FTSE 100 each edged up 0.1%. In Asia, the Hang Seng index in Hong Kong was close to flat, while the South Korean Kospi index slipped 0.2% and the Japanese Nikkei 225 index fell 1.1%.
Trump’s national security advisor Michael Flynn resigns, officials work frantically to drain water from Lake Oroville, Congress has been busy writing bills, and federal officials say they haven’t broadened the scope of immigration enforcement raids.
Trump’s national security advisor Michael Flynn resigns, officials work frantically to drain water from Lake Oroville, Congress has been busy writing bills, and federal officials say they haven’t broadened the scope of immigration enforcement raids.
Trump’s national security advisor Michael Flynn resigns, officials work frantically to drain water from Lake Oroville, Congress has been busy writing bills, and federal officials say they haven’t broadened the scope of immigration enforcement raids.
Trump’s national security advisor Michael Flynn resigns, officials work frantically to drain water from Lake Oroville, Congress has been busy writing bills, and federal officials say they haven’t broadened the scope of immigration enforcement raids.
Teresa Seim of Oroville evacuated to the Silver Dollar Fairgrounds in Chico. (Brian van der Brug / Los Angeles Times)
Teresa Seim of Oroville evacuated to the Silver Dollar Fairgrounds in Chico. (Brian van der Brug / Los Angeles Times)
More than 100,000 people in communities downstream of Lake Oroville were told to evacuate Sunday evening after authorities grew concerned that dangerous flood waters would start surging out of the huge reservoir.
More than 100,000 people in communities downstream of Lake Oroville were told to evacuate Sunday evening after authorities grew concerned that dangerous flood waters would start surging out of the huge reservoir.
Highlights from the 2017 Grammy Awards at the Staples Center.
Highlights from the 2017 Grammy Awards at the Staples Center.
Adele’s big night at the Grammys, an overflowing dam threatens homes in Northern California, Santa Monica is set to approve the nation’s most extensive seismic retrofit plan, and L.A. Metro officials continue to be vexed by falling ridership.
Adele’s big night at the Grammys, an overflowing dam threatens homes in Northern California, Santa Monica is set to approve the nation’s most extensive seismic retrofit plan, and L.A. Metro officials continue to be vexed by falling ridership.
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UPDATES:
8:20 a.m.: This article was updated with market prices and context.
This article was originally published at 6:50 a.m.
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