After Market: Yellen Talks of Frothiness, Stocks Head Downward

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Wall Street was on a see-saw Tuesday as it weighed strong bank earnings against words of caution from the Fed. Janet Yellen rattled the markets with an unusual comment saying biotech and social media stocks have gotten frothy of late. That sent some shares lower.

By the end of the day the Dow Jones industrial average (^DJI) had gained 5 points, but the Nasdaq composite (^IXIC) fell 24 and the Standard & Poor's 500 index (^GPSC) was down by 3 points.

Social media stocks got a slap in the face from the Fed comments and many closed lower. Yelp (YELP) was down almost 3 percent, while Facebook (FB), Twitter (TWTR), Groupon (GRPN) all fell around 1 percent. Biotech stocks, many of them penny stocks, were also sharply lower.

On the flip side, the banks had a good day thanks to strong earnings reports. JPMorgan Chase (JPM) was the second major commercial bank this week to beat on earnings expectations, even though it posted a decline in profit for the last quarter. The stock gained more than 3.5 percent.

A pickup in investment banking revenue helped Goldman Sachs (GS) post a 5 percent profit for the quarter and the stock gained more than 1 percent.

Another bank -- Comerica (CMA) -- also beat on earnings, and its stock gained more than 2.5 percent.

And the earnings parade marched on: The world's largest health care product company Johnson & Johnson (JNJ) fell 2 percent despite beating on earnings and raising its forecast. This could be a classic case of buy on the rumor, sell on the news.

GoPro (GPRO) rebounded on Tuesday after a heavy bout of selling on Monday. The stock gained 13 percent after JPM Securities initiated coverage with a buy rating.

Fashion king Michael Kors (KORS) was not in vogue today. Shares fell more than 7 percent after analysts at Sterne Agee expressed concern about the company's margins and sales in Europe.

Another big loser on the day was tobacco firm Lorillard (LO), down 10.5 percent after announcing it would be bought by rival Reynolds American (RAI), which also fell almost 7 percent.

Apollo Group (APOL), which owns several for-profit educational institutions fell 2 percent on news the Department of Education is investigating the financial aid programs at the company's University of Phoenix.

And one of the top gainers on the day was oil and gas exploration company Anadarko (APC). It gained 3.5 percent after several positive announcements.

-Produced by Karina Huber.

What to Watch Wednesday:

  • The Labor Department releases the Producer Price Index for June, 8:30 a.m. Eastern time.
  • The Federal Reserve releases industrial production for June at 9:15 a.m.
  • The National Association of Home Builders releases its July housing market index at 10 a.m.
  • The Federal Reserve releases its survey of recent economic conditions across the country, known as the Beige Book, at 2 p.m.
These major companies are scheduled to release quarterly financial statements:
  • Abbott Laboratories (ABT)
  • Bank of America (BAC)
  • BlackRock (BLK)
  • Charles Schwab (SCHW)
  • EBay (EBAY)
  • Las Vegas Sands (LVS)
  • PNC Financial Services (PNC)
  • U.S. Bancorp (USB)
  • United Rentals (URI)
  • Yum Brands (YUM)

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jrb359

I heard yesterday that 46% of working Americans live paycheck to paycheck. How can they save?

July 15 2014 at 6:55 PM Report abuse -2 rate up rate down Reply
2 replies to jrb359's comment
theycallmeroy3

100% of working people should live paycheck to paycheck. Its simply a matter of allocation.
Some allocate better than others. Proper allocation is critical when it comes to savings.
And if it starts with saving a penny, so be it.
Totally fundamental. Either one gets it, or doesn't. Absolutely no middle ground.

July 15 2014 at 7:28 PM Report abuse -1 rate up rate down Reply
Valerie

@ jrb359 --- How can they save??? For starters, they can QUIT SMOKING. Nearly all of the so-called "poor people", working minimum wage jobs, are smokers. (Ever notice that line of people standing in front of the grocery store convenience counter, waiting to buy cigarets??? They all look like they can't afford that $5 pack of smokes --- which they can't.)

Ditch the smokes. Sweat out the cold turkey withdrawal. Then, that "poor person" will have nearly $2,000 a year that used to be wasted on smoking, that can be redirected to a savings account.

Second, QUIT PLAYING THE LOTTERY. The lottery is the second biggest way that the poor waste their money. That's more money that could be going into a savings account.

Third, cut back on the expensive cable TV service. (Better, yet, get smart and get rid of that entirely.) More $$$ for savings.

Fourth --- isn't it odd how every person who claims to be "broke" always has a late model SmartPhone and an expensive data plan??? Cut back on the cost for that. More savings.

Fifth --- Quit filling up the grocery cart with carbonated soda drinks, beer, and bags of snacks. All that does is burn cash and make you fat.

Sixth --- Save your pocket change. Every day, dump that into some sort of container. At the end of the year, deposit that change into your savings account.

There are lots more ways to save money. Google the subject, and you will get enough hits to keep you reading for days.

Resolve to quit the mindless spending on various forms of entertainment, and redirect that money to a savings account. You will be amazed at how much you will be able to add to that account in a year's time.

It's all a matter of priorities and will power. If you are sick and tired of just "getting by" and living from one paycheck to another, you can decide to change that. Any day can be a turning point for the better in your life, if you really want that to happen.

July 15 2014 at 10:17 PM Report abuse -1 rate up rate down Reply
csconradesq

What the hell is "frothy"???

July 15 2014 at 6:17 PM Report abuse rate up rate down Reply
1 reply to csconradesq's comment
theycallmeroy3

In Fed speak its when one buys their housekeeper a Lamborghini veneno.

July 15 2014 at 7:15 PM Report abuse -2 rate up rate down Reply
scottee

we need to be a country of savers....not debtors or spenders or liars.

who will audit and end The Fed?? their purpose is what?

July 15 2014 at 4:45 PM Report abuse rate up rate down Reply
2 replies to scottee's comment
clark8642

The Fed is audited annually except for its monetary policy function. It works for the Congress. Its mission is outlined in its publication Purposes and Functions and in its Annual Report to the Congress which is a detailed report to the Congress of its activities and finances for each calendar year. All of this is available at WWW.FRB.GOV if you are interested.

July 15 2014 at 5:50 PM Report abuse -1 rate up rate down Reply
ted_wilson7

we need to be a country of savers.****** Not as long as we're a country of "printers"…….

July 15 2014 at 6:06 PM Report abuse rate up rate down Reply