Stocks Close Modestly Higher Following Yellen Testimony - U.S. Commentary

(RTTNews) - Stocks turned in a relatively lackluster performance during trading on Tuesday before eventually ending the session modestly higher. With the uptick on the day, the major averages added to the notable gains posted in the previous session.

The major averages closed above the unchanged line but off their highs for the session. The Dow edged up 24.86 points or 0.1 percent to 17,829.73, the Nasdaq crept up 6.55 points or 0.1 percent to 4,843.76 and the S&P 500 rose 5.65 points or 0.3 percent to 2,088.90.

The higher close by stocks came on the heels of Federal Reserve Chair Janet Yellen's semi-annual testimony before the Senate Banking Committee.

In her prepared remarks, Yellen said a cautious approach on interest rates remains appropriate amid considerable uncertainty about the economic outlook.

"Proceeding cautiously in raising the federal funds rate will allow us to keep the monetary support to economic growth in place while we assess whether growth is returning to a moderate pace, whether the labor market will strengthen further, and whether inflation will continue to make progress," she said.

Yellen suggested that the Fed will need to see an improvement in the labor market before considering another rate hike.

The Fed chief also warned that Thursday's referendum on whether Britain will remain in the European Union could have "significant economic repercussions."

A poll conducted by ORB for the Daily Telegraph found that 53 percent of British voters support remaining in the EU compared to 46 percent that prefer to leave.

However, a separate poll conducted by YouGov for the Times showed voters split 44 percent to 42 percent in favor of the so-called Brexit, with a significant 9 percent undecided.

Among individual stocks, United Continental (UAL) turned in a strong performance after the airline said initiatives it is currently implementing are expected to drive more than $3 billion in incremental value by 2018.

Audio chipmaker Cirrus Logic (CRUS) also moved notably higher after Canaccord Genuity initiated coverage of the company's stock with a Buy rating and a $52 price target.

On the other hand, shares of Impax Laboratories (IPXL) fell sharply after the drug company agreed to acquire a portfolio of generic products from Teva Pharmaceutical (TEVA) and Allergan (AGN) for $586 million.

Trucking company Werner Enterprises (WERN) also came under pressure after providing disappointing second quarter guidance.

Sector News

Electronic storage stocks showed a substantial move to the upside on the day, driving the NYSE Arca Disk Drive Index up by 3.5 percent. The jump lifted the index to its best closing level in well over six months.

Within the storage sector, Violin Memory (VMEM) continued to experience considerable volatility, soaring by 10.5 percent to a six-month closing high.

Significant strength was also visible among software stocks, as reflected by the 1.4 percent gain posted by the Dow Jones Software Index. Industry giant Microsoft (MSFT) led the way higher, surging up by 2.2 percent.

Telecom, airline, and energy stocks also moved notably higher on the day, while gold, steel, and biotechnology stocks came under pressure.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index surged up by 1.3 percent, while China's Shanghai Composite Index fell by 0.4 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the German DAX Index and the French CAC 40 Index advanced by 0.5 percent and 0.6 percent, respectively.

In the bond market, treasuries moved moderately lower, extending the pullback seen over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.7 basis points to 1.697 percent.

Looking Ahead

Trading on Wednesday may be impacted by a report on existing home sales as well as Yellen's second day of testimony on Capitol Hill.

On the earnings front, Adobe Systems (ADBE), FedEx (FDX), KB Home (KBH), and La-Z Boy (LZB) are due to release their quarterly results after the close of today's trading.