Wednesday July 12th

12-07-2017

Dow futures jump 100 points as Yellen signals gradual rate increases ahead

U.S. stock index futures pointed to a higher open on Wednesday as traders digested prepared remarks from the top-ranking Federal Reserve official. Federal Reserve Chair Janet Yellen said the central bank is likely to reduce stimulus later this year. The Fed accumulated its $4.5 trillion balance sheet as it sought to stimulate the economy during and after the financial crisis. The expansion came largely through the purchase of Treasurys and mortgage-backed securities. She also said the balance sheet reduction and rate increases would be gradual. Yellen also noted rates won't have to rise as much to get to neutral, as in previous decades. Yellen will deliver her remarks in front of Congress later on Wednesday. Stock futures jumped after the remarks were released. Dow futures traded 105 points higher, while S&P and Nasdaq futures climbed 11.25 points and 42.75 points, respectively. On the earnings front, Bank of the Ozarks and Fastenal posted quarterly results before the bell. Barnes & Noble and MSC Industrial are both due to report after the market close. In Europe, the pan-European Stoxx-600 index was around 0.9 percent higher on Wednesday. In Asia, the Shanghai composite in China closed 0.16 percent lower, while the Nikkei in Japan closed 0.48 percent lower. In oil markets, Brent crude traded at around $48.27 a barrel on Tuesday, up 1.6 percent, while U.S. crude was around $45.89 a barrel, up 1.9 percent. Gold held steady on Wednesday as investors awaited testimony from U.S. Federal Reserve Chair Janet Yellen and central bank officials expressed caution about further interest rate hikes. Any pause in U.S. interest rate increases would be beneficial for gold as investors seek returns in other assets. While dollar-denominated commodities typically rise when the greenback declines, reflecting the intrinsic value of the commodity. Spot gold rose 0.01 percent to $1,217.42. U.S. gold futures for August delivery rose 0.14 percent to 1,216.40.