Closing Update: Dow Ends Slightly Higher, S&P 500 Slightly Lower as Late Optimism Overcomes Fed Worries
The financial markets ended narrowly mixed Tuesday, with blue-chips leading a recovery from declines ignited by the Federal Reserve today suggesting valuations for so-called momentum stocks may be "substantially stretched," sending shares of biotech and social media companies skidding.
Financial stocks helped erase those fears after JPMorgan Chase ( JPM ) and the Goldman Sach Group ( GS ) posted better-than-expected Q2 results. Consumer stocks fell after retail sales growth last month trailed market expectations while shares of commodity-related fell as crude oil futures slipped under $100 per barrel for the first time in two months and gold again fell under $1,300 per ounce.
In its biannual report accompanying Fed Chair Janet Yellen's testimony today before the Senate Banking Committee, the central bank wrote, "valuation metrics in some sectors do appear substantially stretched - particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year."
The Nasdaq Biotechnology Index (^NBI) fell as much as 2.7% % and the NYSE ARCA Biotech Index (^BTK) dropped over 2.8% today before trimming a portion of those losses as the session continued. The Nasdaq Internet Index (^QNET) was down about 1.5% at its intra-day low, finishing with a 0.6% decline.
Consumer stocks also floundered after the Commerce Department reported just a 0.2% rise in U.S. retail sales during June from the prior month, lagging the market consensus looking for a 0.6% rise. A big drop in sales at building and garden supply stores kept a lid on consumer purchases, with restaurant sales and car buying also declining from May levels.
And after more than two weeks of falling prices for crude oil, the August West Texas Intermediate contract settled $1.13 lower at $99.86 - the first time the benchmark contract broke the $100 threshold since May 12 as supply worries waned when Libyan oil officials said production from its Sharara field has climbed to 554,000 barrels daily.
Other commodity futures also fell. August natural gas fell 5 cents to finish at $4.10 per 1 million BTU. August gold declined $9.50 to $1,297.20 per ounce while September silver dropped 3 cents to $20.89 per ounce. September copper was unchanged at $3.25 per pound.
Here's where the U.S. markets stood at the end-of-day:
Dow Jones Industrial Average up 5.26 (+0.03%) to 17,060.68
S&P 500 down 3.82 (-0.19%) to 1,973.28
Nasdaq Composite Index down 24.03 (-0.54%) to 4,416.39
Hang Seng Index up 0.49%
Shanghai China Composite Index up 0.18%
FTSE 100 Index down 0.53%
(+) CDXS, Licenses CodeEvolver protein engineering technology to GlaxoSmithKline ( GSK ) in exchange for $25 mln over the next two years - including $6 mln upfront payment and up to $19 mln in milestone payments.
(+) PLUG, FBR Capital begins coverage of the alternative-energy compay with an Outperform rating and an $8 price target.
(+) GPRO, Receives an Outperform rating and a $60 price target in new coverage at JMP Securities.
(-) OPTT, Cancels $218 mln wave-power energy project off the coast of Australia, stating in a regulatory filing the proposal is not "commercially viable." The company also will repay a $62.5 mln grant from the Australian government.
(-) STLY, Chief financial officier stepping down in ongoing restructuring. Narrows Q2 adjusted net loss to $2.8 mln, or $0.20 per share, from $3.2 mln last year and beating Street view by $0.04. Revenue little changed at $24 mln, topping estimates by $400,000.
(-) STEM, Proposes $20 mln offering of 11.3 mln shares of its common stock and warrants to buy up to 9.6 mln additional shares to two unnamed institutional biotechnology investors.