By Ellie Ismailidou and Victor Reklaitis, MarketWatch
Market caught between 'nervousness and cautiousness,' analysts
say
U.S. stocks pared early gains Tuesday after Federal Reserve
Chairwoman Janet Yellen said a victory for the "leave camp" in this
week's U.K. referendum on membership in the European Union would
pose a significant risk to the U.S. economy and global financial
market stability.
In her testimony to the Senate Banking Committee
(http://www.marketwatch.com/story/feds-yellen-says-brexit-could-have-significant-economic-repercussions-2016-06-21),
Yellen reiterated the cautious approach to raising interest rates
that the Federal Open Market Committee signaled last week when it
stood pat on U.S. interest rates.
"Our cautious approach...remains appropriate," Yellen said
Tuesday.
Stocks slid at the beginning of her testimony but later
recovered some ground, building on the gains from a strong rally on
Monday, which was aided by polls showing support swinging back
toward the U.K. remaining a member of the European Union.
The S&P 500 was up 3 points, or 0.1%, at 2,086, led by
telecom shares, which were up 0.6%. Four of the S&P's 10
sectors were in negative territory, with materials stocks leading
the losses, in part weighed by a drop in crude-oil prices .
The Dow Jones Industrial Average added 22 points, or 0.1%, to
17,825, led by a 1.4% gain by Microsoft Corp.(MSFT) and a 0.8% rise
by Nike Inc.(NKE). The blue-chip gauge was weighed down by American
Express Co.(AXP) and McDonald's Corp.(MCD), both down 0.8%.
Meanwhile, the Nasdaq Composite was up 2 points, or less than
0.1%, at 4,839.
Even as stocks held on to modest gains, the overall tone of the
market was "nervousness and cautiousness," said Phil Orlando,
equity market strategist at Federated Investors.
Investors are "playing defense until [they] get some clarity" on
a series of uncertainties looming over the market, most notably
this Thursday's referendum on a potential Brexit, the U.S.
elections and the Fed's next steps on monetary policy. That is
partly why telecom, traditionally viewed as a safety play in times
of market turmoil, was leading the market, Orlando added.
According to some analysts, Yellen's testimony on Tuesday did
little to offer a clear view on when the central bank could hike
U.S. rates again.
"Bottom line, there is nothing new here that is any different
than the FOMC statement and press conference last week," said Peter
Boockvar, chief market analyst at The Lindsey Group, in emailed
comments.
Though policy makers "would love" to raise interest rates,
Boockvar said, "they remain scared about the implications of higher
rates on a fragile economy that remains very overindebted and
[about] what higher rates will mean for asset prices."
Meanwhile, investors continued to closely follow the most recent
polls from the U.K., the latest of which showed a split vote
(http://www.marketwatch.com/story/pound-pressured-as-brexit-poll-shows-remain-lead-shrinking-2016-06-21),
with a slight advantage for the "remain" vote, which got 45% of
voters, while the "leave" vote got 44%.
While that's a statistical dead heat, it marked a narrowing of
the "remain" camp's three percentage point lead seen in a poll
published Saturday, leading the British pound to pull back from a
five-month high reached overnight.
See:Soros says Brexit aftermath will be worse than time he broke
Bank of England
(http://www.marketwatch.com/story/soros-says-brexit-aftermath-will-be-worse-than-time-he-broke-the-bank-of-england-2016-06-20)
Other markets: European stocks advanced moderately after soaring
Monday
(http://www.marketwatch.com/story/european-stocks-leap-as-brexit-polls-show-shift-to-remain-camp-2016-06-20)
as Brexit fears abated, while Asian markets closed mostly higher
(http://www.marketwatch.com/story/nikkei-leads-asia-mostly-higher-as-bets-against-brexit-rise-2016-06-21).
July West Texas Intermediate crude traded lower
(http://www.marketwatch.com/story/crude-oil-turns-lower-as-markets-refocus-on-supply-issues-2016-06-21)
as market players turned their attention back to oversupply
worries. The July contract expires at Tuesday's settlement, and
August will become the front month for WTI. Gold futures
(http://www.marketwatch.com/story/gold-extends-decline-ahead-of-yellen-testimony-brexit-vote-2016-06-21)
tumbled by the ICE U.S. Dollar Index rose.
Read: The Brexit gold bet could be the smartest, or the dumbest,
ever
(http://www.marketwatch.com/story/the-brexit-gold-bet-could-be-the-smartest-or-the-dumbest-ever-2016-06-21)
Company news: Shares of home builder Lennar Corp.(LEN) gained
1.1% after the company posted better-than-expected quarterly
earnings and revenue
(http://www.marketwatch.com/story/lennar-posts-double-digit-gains-in-new-orders-2016-06-21).
Used-car seller CarMax Inc.(KMX) fell 4.8%, after the company's
profit and sales lagged estimates
(http://www.marketwatch.com/story/carmax-profit-and-sales-lag-estimates-2016-06-21).
Sabre Corp. shares (SABR) fell 1.3% after the travel software
company said CEO Tom Klein plans to resign
(http://www.marketwatch.com/story/sabre-corp-ceo-klein-to-resign-2016-06-20).
Facebook Inc.(FB) was up 1% after the tech company's executives
reiterated Monday their interest in entering China
(http://www.marketwatch.com/story/facebook-still-hopes-to-gain-entry-to-china-2016-06-20),
while answering questions at the company's annual shareholder
meeting.
(END) Dow Jones Newswires
June 21, 2016 10:52 ET (14:52 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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