By Dow Jones Business News,
July 15, 2014, 04:16:00 PM EDT
By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market closed lower, dragged down by sharp declines in momentum stocks after
the Federal Reserve suggested valuations on biotech and Internet stocks may be stretched.
A positive start early in the session on better-than-expected results from J.P. Morgan Chase & Co. and Goldman Sachs
Group Inc. and generally positive economic data fizzled out when Fed Chairwoman Janet Yellen began her two-day
The S&P 500 (SPX) recovered some of the losses, but closed 3.78 points, or 0.2%, lower at 1,973.32. The Dow Jones
Industrial Average (DJI) ended the day 5.3 points higher at 17,060.75, after setting an intraday record in the morning.
The Nasdaq Composite (RIXF) dropped 24.03 points, or 0.5%, to 4,416.39. The Russell 2000 (RUT) fell 11.5 points, or 1%,
to the preliminary 1,154.18.
The iShares Nasdaq Biotechnology ETF (IBB) was hit hard, falling 2.2%, while the Global X Social Media Index ETF
(SOCL) gave up 1.1%.
Follow MarketWatch's live blog of today's stock-market action.
"Investors are particularly interested to see proof that earnings did bounce back in the second quarter. If we do not
see solid growth and positive outlook for the rest of the year, we might see some repricing, as current multiples
without growth are not sustainable," said Drew Wilson, investment analyst at Fenimore Asset Management
Federal Reserve Chairwoman Janet Yellen told Congress the Fed could act sooner on interest rates if the labor market
keeps surprising. But, she added, that time is not yet here.
Yellen never mentioned the stock values of social media and biotech companies in either her prepared remarks or
answers to the questions from the senators. That reference to valuations, which hit the Nasdaq, was in a separate Fed
monetary policy report submitted to Congress along with Yellen's testimony.
Read: Live blog and video of Janet Yellen's appearance before Senate.
Among the day's economic news, Empire State manufacturing activity picked up in July to its highest reading in four
years. While retail sales in June rose less than expected, most stores except for auto dealers and home-improvement
outlets boasted an improvement in revenue.
In earnings news, J.P. Morgan Chase ( JPM ) reported better-than-expected earnings. Shares rose 3.5%. Read the recap of
the earnings call with analysts.
Goldman Sachs( GS ) reported second-quarter earnings of $4.10 a share and revenue of $9.13 billion, beating Wall Street
estimates. Goldman shares rose 1.3%. Recap: Goldman Sachs CFO says environment mixed with historically low volatility
As high-growth momentum stocks were hit, Tesla Motors, Inc. ( TSLA ) shares dropped 3.1%, Twitter, Inc. (TWTR) and
Facebook Inc. ( FB ) fell 1.1%.
Yahoo Inc. (YHOO) shares rose over 3% in after-hours trade after reporting second-quarter results that were in line
with expectations. Intel Corp. ( INTC ) also rose 3.4% after-hours, following quarter reports. Read more about the day's
notable movers here.
Gold recovers, pound rallies
Asian markets did build on those gains, with the Nikkei 225 index settling at a more than one-week high. Gold(GCU4)
fell for a third session on Tuesday on the back of dovish comments from Federal Reserve Chairwoman Janet Yellen. Crude
oil futures(CLQ4) futures succumbed to renewed selling pressure Tuesday, pushing the U.S. benchmark back below $100 a
barrel for the first time since May.
The German ZEW economic-sentiment reading on Tuesday fell far short of expectations, which weighed on Europe stocks
and the euro (EURUSD). The British pound(GBPUSD) rallied after U.K. inflation inched closer to the Bank of England's 2%
More must-reads from MarketWatch:
Yellen: Fed may move sooner on rates if the labor market keeps surprising
3 ways to avoid the next Cynk
Will the S&P 500 see 2,000 this week?
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
Copyright (c) 2014 Dow Jones & Company, Inc.