Stocks rose moderately Thursday in relatively quiet trading, a contrast to the heavy selling that occurred a day earlier when Federal Reserve chair Janet Yellen suggested that stock prices might be too high.
The bigger action was in the bond market. U.S. Treasurys rose sharply in the afternoon, sending benchmark yields lower, a day after a flood of selling.
Yellen caught investors off guard Wednesday by saying stock values were generally “quite high.” She was speaking in response to a question about risks to financial stability at a conference in Washington.
Fed officials do not usually offer opinions about market levels. In the mid-1990s, stocks swooned after then Fed chairman Alan Greenspan used the term “irrational exuberance” when talking about the market.
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“Investors remain confused as to where this market wants to go,” said Jonathan Corpina, a managing partner at Meridian Equity Partners.
Many investors agree that the U.S. stock market is trading at stretched levels. Quarterly corporate earnings, ultimately what stocks are valued by, were better than expected, but those expectations were low in the first place.
Now with Yellen’s comments, some analysts say stocks are unlikely to advance much further from here. Investors are paying about $17 for every dollar of earnings in the Standard & Poor’s 500, not excessively high but still above the $15 that investors have historically paid.
“This market just feels tired. I just see us moving sideways for a while,” said Wayne Wilbanks, chief investment officer at Wilbanks, Smith, Thomas in Norfolk, Va., which manages about $2.4 billion in assets.
The Dow rose 82.08, or 0.5 percent, to 17,924.06, erasing the losses from the previous day. The S&P 500 rose 7.85, or 0.4 percent, to 2,088.00. The Nasdaq composite index rose 25.90, or 0.5 percent, to 4,945.54.
Even with today’s gains, the major indexes are down between 0.6 percent and 1.2 percent for the week.
The next big thing on investors’ plates will be the April jobs report Friday. Economists expect that U.S. employers added 215,000 jobs in April and the unemployment rate ticked down to 5.4 percent. The March jobs report was much weaker than Wall Street had expected, so economists and investors are going to be looking for any significant revisions to the previous numbers.
The bond market had a neck-twisting day as bond prices rose sharply. The yield on the 10-year Treasury note fell to 2.19 percent from 2.24 percent Wednesday, an unusually large move.
Among individual companies, Whole Foods Market lost $4.65, or 10 percent, to $43.07 after the company’s sales growth for the first quarter was weaker than analysts had expected.
Yelp jumped $8.79, or 23 percent, to $47.01 after The Wall Street Journal reported that the online review website was exploring a sale.
In energy markets, oil fell more than 3 percent because of gains in the U.S. dollar, which makes oil more expensive for holders of other currencies.
U.S. oil dropped $1.99, or 3.3 percent, to $58.94 per barrel. That marked the biggest drop in U.S. oil since April 8.