By Anora Mahmudova and Wallace Witkowski, MarketWatch
Major indexes on track for weekly gains
U.S. stocks struggled to hold on to gains Friday ahead of the
long holiday weekend as Federal Reserve Chairwoman Janet Yellen
signaled that a rate hike may be appropriate in coming months..
"It's appropriate for the Fed to gradually and cautiously
increase our overnight interest rate over time," Yellen said at a
high-profile visit to Harvard University on Friday
(http://blogs.marketwatch.com/capitolreport/2016/05/27/live-blog-and-video-of-janet-yellen-interview).
That means a move could be appropriate in coming months, she
said.
Investors were eager to hear any views
(http://www.marketwatch.com/story/feds-yellen-may-send-interest-rate-message-by-not-making-one-2016-05-25)
on the interest rate outlook, after a week of hawkish comments from
prominent Fed members.
Earlier this month, minutes from the U.S. central bank's April
meeting took markets by surprise by indicating a rate increase in
June is still on the table.
Still, the benchmark S&P 500 index is on track to end the
week with the biggest gains in nearly two months. U.S. markets will
be closed on Monday for the Memorial Day
(http://www.marketwatch.com/story/when-do-markets-close-for-memorial-day-2016-05-25)
holiday.
The S&P 500 rose 5 points, or 0.2%, to 2,095, paring earlier
gains, with seven of its ten main sectors trading higher. Energy
shares were weighed down by falling oil prices.
The Dow Jones Industrial Average gained 16 points, or 0.1%, to
17,845. Meanwhile, the Nasdaq Composite advanced 20 points, or
0.4%, at 4,922.
"The gains on the S&P 500 this week have been driven by
several factors: oil going over $50 a barrel, gains in Asian and
European markets, decreased anxiety about Brexit and big jumps in
home sales," said Randy Frederick, managing director of Trading
& Derivatives at Schwab Center for Financial Research.
Frederick said the 2,100 area on the S&P 500 is likely to
offer some resistance, however. "It is possible that by the end of
the month or early June we go to all-time highs, but until we are
through with Brexit and a rate hike in July, markets are likely to
be rangebound," Frederick said.
U.S. stocks closed little changed
(http://www.marketwatch.com/story/us-stock-futures-catch-their-breath-after-dow-jumps-359-points-in-2-days-2016-05-26)
on Thursday after two days of strong gains, which came on the back
of upbeat economic data and oil prices moving above $50 a barrel.
However, the rally started to fizzle later Thursday as crude failed
to hold above $50.
Both West Texas Intermediate crude oil and Brent continued to
fall on Friday
(http://www.marketwatch.com/story/oil-spends-less-than-a-day-above-50-as-investors-cash-in-ahead-of-opec-2016-05-27).
The ICE dollar index was up 0.5% to 95.65
(http://www.marketwatch.com/story/dollar-holds-tight-as-investors-wait-for-yellen-to-speak-later-2016-05-27).
After the hawkish minutes, expectations for a rate hike this
summer increased. Fed funds futures, which two weeks ago were
pricing in only a 4% probability of a June rate hike, were
signaling a 34% chance on Friday, according to the CME Fed Watch
tool
(http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html).
The probability of a July rate hike is at 62%.
Economic news: U.S. first-quarter economic growth
(http://www.marketwatch.com/story/first-quarter-us-gdp-raised-to-08-2016-05-27)was
revised up to 0.8% from a previous reading of 0.5%, based on a
fresh estimate that shows somewhat stronger home construction and
restocking of warehouse shelves.
Consumer sentiment eased slightly
(http://www.marketwatch.com/story/consumer-sentiment-pulls-back-as-election-uncertainty-weighs-2016-05-27)in
late but remained higher than in April as household views of the
economy and finances stabilized.
Market reaction to both reports was muted.
At the Group of Seven meeting in Japan, political leaders warned
of rising risks to the global economy
(http://www.marketwatch.com/story/g-7-warns-against-currency-wars-reliance-on-new-monetary-policy-tools-2016-05-27),
but stopped short of announcing any coordinated plan to tackle the
concerns.
Movers & shakers: Shares of Ulta Salon Cosmetics &
Fragrance Inc.(ULTA) jumped 8.2%. Earnings from the makeup retailer
released late Thursday topped Wall Street estimates
(http://www.marketwatch.com/story/ulta-shares-rally-after-earnings-top-street-view-2016-05-26).
Valeant Pharmaceuticals International Inc.(VRX.T) rose 9% after
a report said it had received and rejected a takeover offer
(http://www.marketwatch.com/story/valeant-rejected-takeover-bid-from-takeda-tpg-report-2016-05-26)
earlier this year from Japan's Takeda Pharmaceutical Co.(4502.TO)
and private-equity firm TPG.
Big Lots Inc.(BIG) rallied 13% after the discount retailer
boosted its outlook for the year
(http://www.marketwatch.com/story/big-lots-raises-guidance-as-profit-increases-20-2016-05-27)
and reported a 20% rise in profit.
Alphabet Inc.(GOOGL) inched 1.2% higher after the Google-parent
on Thursday won a jury verdict
(http://www.marketwatch.com/story/google-beats-oracle-in-landmark-case-involving-use-of-java-apis-in-android-2016-05-26)
in a long-running case against Oracle Corp.(ORCL)
GameStop Corp.(GME) slumped 4.8% after the videogame retailer
late Thursday reported an 11% drop in earnings
(http://www.marketwatch.com/story/gamestop-posts-decline-in-revenue-profit-2016-05-26-174853626).
Other markets: European markets were mixed
(http://www.marketwatch.com/story/european-stocks-edge-lower-with-yellen-speech-ahead-2016-05-27),
taking a breather after a three-day rally
(http://www.marketwatch.com/story/european-shares-waver-as-spanish-banks-slide-oil-stocks-rise-2016-05-26).
Markets closed mostly higher in Asia
(http://www.marketwatch.com/story/asian-shares-head-for-third-straight-week-of-gains-2016-05-27),
but traders there were cautious ahead Yellen's comments later on
Friday.
Gold futures
(http://www.marketwatch.com/story/golds-slide-extends-into-8th-day-brings-drop-in-may-to-55-2016-05-27)
extended their slide on Friday, on track to log an eighth straight
drop, as U.S. dollar strength in May helped push precious metals
prices to their lowest level since early April.
--Sara Sjolin in London contributed to this report.
(END) Dow Jones Newswires
May 27, 2016 14:04 ET (18:04 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.