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GLOBAL MARKETS-US stocks down, yields up after Yellen boosts rate hike expectations

Published 2015-11-04, 12:08 p/m
© Reuters.  GLOBAL MARKETS-US stocks down, yields up after Yellen boosts rate hike expectations
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* Yellen's comment boosts dollar, Treasury yields
* Stocks down after data, Yellen hints at Dec. rate hike
* Asia rally spills over the Europe despite earnings misses
* Energy sector stocks reverse course as oil prices fall

(Updates with U.S. stock market open, changes byline, changes
dateline, previous LONDON, Yellen comments)
By Sinead Carew
NEW YORK, Nov 4 (Reuters) - Wall Street stocks, unable to
follow a rally in European and Asian stocks on Wednesday, fell
further after Federal Reserve Chair Janet Yellen said the U.S.
economy is "performing well" and could justify an interest rate
hike in December.
The U.S. dollar and U.S. Treasury yields moved higher after
Yellen's comments, building on a rise that followed earlier data
showing stronger-than-expected private-sector U.S. job growth.
Yellen told Congress the Fed expects the economy to continue
to grow at a pace that returns inflation to policy-makers'
target and that "if the incoming information supports that
expectation ... December would be a live possibility" for a rate
increase at the Fed's next policy-setting meeting. urn:newsml:reuters.com:*:nN9N0X5011
U.S. stocks, already down after the data, took a deeper dive
after Yellen's comments.
At 1138 EST (1638 GMT) the Dow Jones industrial average
.DJI fell 52.58 points, or 0.29 percent, to 17,865.57, the S&P
500 .SPX lost 8.79 points, or 0.42 percent, to 2,101 and the
Nasdaq Composite .IXIC dropped 15.53 points, or 0.3 percent,
to 5,129.60.
U.S. two-year Treasury yields hit their highest levels in
over four years after Yellen's comments.
U.S two-year note yields hit 0.8200 percent, their highest
level since April 2011. Three-year yields hit 1.1484 percent,
their highest level in four months, while five-year yields hit
1.6490 percent, their highest in roughly three months.
The U.S. dollar index .DXY was up 0.8 percent against a
basket of major currencies while the euro fell about 1 percent
against the dollar. urn:newsml:reuters.com:*:nL1N12Z1NJ
U.S. private employers maintained a steady pace of hiring in
October and the trade deficit hit a seven-month low in September
as exports rebounded. ADP reported 182,000 new private sector
jobs compared with a 180,000 forecast. urn:newsml:reuters.com:*:nL1N12Z18V
The Federal Reserve had previously said it will move in
December if data shows the economy could sustain it.
"It's positive. It's a good sign. This sets the foundation
and if the rest of the data are good, (the Fed) might feel
compelled to raise rates in December," said Craig Dismuke, chief
economist at Vining Sparks in Memphis, Tennessee referring to
the data which came ahead of Yellen's comments.
The decline in the S&P 500 was led by healthcare, consumer
discretionary and energy sectors.
A U.S. Senate panel continued to put the spotlight on drug
pricing with the launch of a bipartisan probe into
pharmaceutical pricing, seeking documents from four drugmakers
including Valeant Pharmaceuticals (N:VRX) VRX.TO and Turing
Pharmaceuticals, two companies embroiled in controversy over
price hikes on lifesaving drugs. urn:newsml:reuters.com:*:nL1N12Z16D
Oil prices fell after a rally the day before and a U.S.
government report showed a higher than expected build in oil
stocks as well as on OPEC's expectations that demand for its oil
will remain under pressure in the next years.
Brent crude futures LCOc1 were down 2.2 percent at $49.39
a barrel while U.S. crude fell 1.8 percent to $47.03. O/R
Gold fell to a fresh one-month low, in its sixth straight
session of losses, as a rising dollar and talk of a near-term
hike in U.S. interest rates kept the precious metal under
pressure. urn:newsml:reuters.com:*:nL3N12Z37P
The FTSEurofirst 300 index .FTEU3 of major companies was
up 0.4 percent, after earlier reaching its highest point since
August 19. Private-sector surveys indicated Germany was on a
solid growth path and French activity expanded at its fastest
clip in four months in October. urn:newsml:reuters.com:*:nL8N12Z1UT
With Europe's earnings season past the halfway point, just
over half of reporting companies reported missed forecasts and
companies exposed to a commodities slump have been hit hard.
In Asia, comments from China's president about the economy
and Beijing's proposal of its five-year plan lifted Shanghai
stocks. MSCI's broadest index of Asia-Pacific shares outside
Japan .MIAPJ0000PUS rose 1.26 percent.

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