Stocks Jump After Beige Book Report, Dovish Yellen Remarks
NEW YORK (TheStreet) -- Major U.S. stock markets jumped Wednesday after better-than-expected Chinese growth while investors digested dovish remarks from Federal Reserve Chairwoman Janet Yellen and an improved Beige Book report. Domestic economic data was mixed.
On Tuesday after the close, Yahoo! (YHOO) said first-quarter earnings dropped to 29 cents a share from 35 cents a share a year earlier. Yahoo! shares were gaining nearly 6% Wednesday afternoon as it helped bolster the Nasdaq.
The Dow Jones Industrial Average popped 1% to 16,424.85, while the S&P 500 was up 1.05% to 1,862.31. The Nasdaq jumped 1.29% to 4,086.23.
- China's gross domestic product growth fell to its slowest level in 18 months at 7.4% during the first quarter due to weaker momentum in investment and consumption. Yet the result was slightly above expectations for a 7.3% reading, leading to uncertainty about whether China will take further measures to boost growth. GDP was 7.7% in the fourth quarter and growth lags the target of 7.5% set by Chinese authorities for 2014.
- Ukraine military tensions continued as vehicles flying Russian flags with armed fighters moved into eastern Ukrainian cities early on Wednesday. The Ukrainian army is pushing to clear pro-Russian separatists out of 10 cities in the eastern region of Donetsk.
- U.S. home construction grew less than forecast in March, with housing starts rising 2.8% to a 946,000 annualized rate after a 920,000 gain for February. Expectations were for an increase to 970,000. Permits for future projects fell.
- U.S. industrial production rose 0.7% in March after an upwardly-revised increase in February of 1.2%. Economists, on average, were expecting in 0.5% gain for March.
- One of the main points Janet Yellen made during a speech at the Economic Club of New York Wednesday was, "the larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained."
- The latest Beige Book report said that anecdotal information from the 12 Federal Reserve Districts suggest economic activity increased in most regions of the country since the previous report, with consumer spending rising in most districts as weather conditions improved. The report overall was not expected to have an impact on Fed policy.
- In international markets, the Hang Seng closed 0.11% higher while the Nikkei jumped 3.01%. Germany's DAX was rising 1.57% while the FTSE was 0.65% higher.
- European Union consumer prices rose at the slowest pace for 4.5 years in the year to March, underlying the problem of falling inflation across the region. Consumer prices in the 18 nations that share the euro were 0.9% higher in March than February, and 0.5% higher than a year earlier.
- The U.K. jobless rate fell to 6.9% in the three months to February, beating expectations of a 7.1% result.
- Companies seeing price action Wednesday included Google (GOOG), Bank of America (BAC), International Business Machines (IBM) and American Express (AXP).
- Google posted earnings of $6.27 a share on $12.19 billion. The street was expecting $6.35 a share in the first quarter. Shares were tumbling more than 5% in after hours trading.
- Bank of America shares dropped 2% to $16.13 after the bank posted a first-quarter loss of 5 cents a share. The bank recorded a $6 billion litigation expense in the quarter.
- IBM posted earnings of $2.54 excluding items on 22.48 billion in revenue. Analysts forecast earnings of $2.54 a share. Shares were falling nearly 3% in after hours.
- American Express is likely to report first-quarter earnings of $1.30 a share. American Express gained 1.6% during the regular trading session.
- After Tuesday's closing, Intel (INTC) announced earnings of 38 cents a share against 40 cents a share a year ago.
- Other stock movers Wednesday include Time Warner Cable (TWC) and Yelp (YELP), following analyst upgrades. Time Warner Cable added 1.1% after being raised to"outperform" from "market perform" at Wells Fargo. Yelp popped 4.4% after Citigroup boosted the stock to "buy" from "neutral."
- Markets closed higher Tuesday amid strong earnings from companies such as Coca-Cola (KO) and Johnson & Johnson (JNJ).
-- By Andrea Tse, Jane Searle and Joe Deaux in New York
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