By Mark DeCambre and Joy Wiltermuth
“A delay that calls into question the federal government’s ability to meet all its obligations would likely cause irreparable damage to the U.S. economy and global financial markets,” Yellen wrote.
New York Fed President John Williams said Wednesday that the U.S. labor market hasn’t seen the “substantial” progress necessary for the central bank to slow down its massive $120 billion in monthly bond purchases, but he expects reduced monthly purchases to start later this year.
St. Louis Fed President Bullard also reiterated in a Wednesday interview with the Financial Times that he expects tapering to start later this year and to end sometime by the first half of next year.
In other economic data, job openings rose to a record 10.9 million in July, the Labor Department said Wednesday , marking the fifth straight all-time monthly high and exceeding forecasts for a rise of 10 million. Job hires, however, slipped by 160,000 to 6.7 million in July. Separations rose 174,000 to 5.8 million.
While some strategists remain optimistic about the outlook for markets, investors also have been advised to be more discerning.
“The best days of cyclical value may be behind us, but it’s too early to turn fully to defensive themes. We are sticking with the reflation trade, but with a focus on identifying companies likely to experience upward earnings revisions,” wrote Lauren Goodwin, economist and portfolio strategist at New York Life Investments in a note published Wednesday.
“We favor a global allocation, with an overweight to international developed equity. Value and small cap equities, with a focus on quality companies, should continue to thrive,” the strategist wrote.
Which companies were in focus?
Spectrum Brands Holdings Inc . /zigman2/quotes/209008733/composite SPB +0.89% soared 17.8% after the branded consumer brands company announced an agreement to sell its hardware and home improvement business for $4.3 billion in cash to Sweden-based ASSA ABLOY.
Coinbase Global Inc. shares COIN fell 3.2%, after the crypto exchange said Wednesday that a U.S. regulator intends to sue it in court if it launches a planned program letting users earn interest on lending crypto.
How did other assets trade?
The yield on the 10-year U.S. Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -0.23% slipped nearly 3.7 basis point to 1.333%. Yields move in the opposite direction of prices.
The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.04% , a measure of the currency against a basket of six major rivals, rose 0.2%.
Oil futures rose, with the U.S. benchmark /zigman2/quotes/209723049/delayed CL00 +0.41% advancing 1.4% to close at $69.30 a barrel on the New York Mercantile Exchange. Gold futures /zigman2/quotes/210034565/delayed GC00 +0.43% fell 0.3% to settle at $1,793.50 an ounce.
European equities closed lower, with the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +1.71% down 1.1% and the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.55% ending Wednesday’s session off 0.8%. The European Central Bank will meet Thursday, and economists expect a modest reduction in the rate of bond purchases.
In Asia, the Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +0.36% rose 1.5%, while the Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.78% slipped 0.1% and Japan’s Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK +0.41% advanced 0.9%.
Barbara Kollmeyer contributed reporting