Stocks were already having a difficult morning having reversed early gains and fallen into negative territory, when Fed Chair Yellen in a Q&A session commented that stocks are a bit pricy. She then qualified that statement by adding that the low level of interest rates helps to justify these valuations to some extent. Well thank you Janet. To be honest, Fed officials have not been exactly stellar in predicting stock market direction. See Chairman Greenspan’s “irrational exuberance” comment in the 90’s right before a historic rise in stock prices, for more evidence.
Nevertheless, things are changing and market participants are having trouble figuring it all out. The dollar has weakened lately after a lengthy period of strength, oil prices have risen to yearly highs, and interest rates, as measured by the 10 year Treasury Note, continue to climb. Are these somewhat contrary developments temporary, or are things really changing?
Anyway, as for today, the Dow Jones Industrial Average was down 86 points to close at 17,841. The S&P 500 was down 9 points to finish the day at 2080. Gold was down $2 to trade at $1191 per ounce, while oil was up $.32 to trade at $60.72 per barrel WTI.
Today’s ADP employment number was disappointing (which makes the move in bonds confusing), so Friday’s non-farm payroll numbers should be really interesting. When all is said and done, market averages are about right where they began the year, and that includes bonds. Let’s see how the markets react over the next two sessions.
Have a nice evening everyone.