US STOCKS-Wall St flat as stalemate counters relief over Yellen

Reuters

* Obama to nominate Yellen as Fed chair Wed

* Alcoa rises, Yum falls after earnings

* Dow up 0.01 pct, S&P off 0.1 pct, Nasdaq off 0.68 pct

By Chuck Mikolajczak

NEW YORK, Oct 9 (Reuters) - U.S. stocks were little changedon Wednesday, as expectations that Janet Yellen will be tappedas the next head of the U.S. Federal Reserve were tempered bythe stalemated fiscal negotiations in Washington.

U.S. President Barack Obama will nominate Yellen, who iscurrently the No. 2 at the Fed, on Wednesday at the White Houseat 3 p.m. (1900 GMT), a White House official said.

Investors expect her to tread carefully in winding downeconomic stimulus, and to provide continuity with the policiesestablished under Fed Chairman Ben Bernanke, whose second termis due to expire on Jan. 31.

"The markets are finding consolation in Yellen's expectednomination because that at least puts the monetary policy on amore certain, or at least, a more familiar path," said AnastasiaAmoroso, Global Market Strategist at J.P. Morgan Funds in NewYork.

"It does remove another hurdle, another piece of the puzzle,another piece of uncertainty that the market likes to seeresolved."

The S&P 500 dropped 1.2 percent on Tuesday, its worstdecline since Aug. 27, sending the benchmark index to its lowestlevel since Sept. 6 as traders cashed in gains in some of theyear's best performers.

The trend among high-flying stocks continued on Wednesdayand weighed heavily on the Nasdaq, with stocks such asAmazon.com, Facebook, and Tesla Motors Inc, each of which had recently hit 2013 highs, among theweakest performers on the index.

In Washington, Obama said he would not hold talks on ways toend the fiscal impasse while under threat from conservativeRepublicans, but agreed to discuss anything, including hishealthcare plan, if they restore government funding and raisethe debt limit.

"From a market perspective, obviously the longer theshutdown continues and the more it bleeds into the debt ceilingdebate, the more the compelling the reason to sell becomes,"said Amoroso.

The crisis in Washington threatens to damage the fiscalstanding of the United States and to derail its fragile economicrecovery.

The Dow Jones industrial average rose 0.89 points or0.01 percent, to 14,777.42, the S&P 500 lost 0.72 pointsor 0.04 percent, to 1,654.73 and the Nasdaq Composite dropped 24.955 points or 0.68 percent, to 3,669.879.

Alcoa Inc climbed 3.9 percent to $8.25 after thealuminum producer reported better than expected earnings, asstrength at the unit that sells auto parts and other complexitems helped offset lower metal prices.

Yum! Brands Inc slumped 7.7 percent to $66.85 asboth the worst performer and biggest drag on the S&P 500 afterthe KFC parent warned it will take longer than expected forrestaurant sales to rebound in China, which accounts for morethan half the company's overall operating profit.

Costco Wholesale Corp slipped 1.4 percent to$110.69 after the retailer posted a 1 percent rise in quarterlyprofit and a 3 percent increase in its same-store sales for themonth of September.

According to Thomson Reuters data, third-quarter earningsare expected to grow 4.3 percent, and revenue 3 percent.

Men's Wearhouse rose 23.4 percent to $43.47 after itrejected smaller rival Jos. A. Bank Clothiers Inc's $2.3 billion takeover offer, saying it significantly undervaluedthe company and could raise antitrust issues. Jos. A. Bankshares rose 5.9 percent to $44.13.

Ariad Pharmaceuticals Inc shares plunged 70.1percent to $5.12 after the company said the U.S. Food and DrugAdministration had placed a partial hold on patient enrollmentfor trials of its cancer drug Iclusig. The Nasdaq biotech index dropped 2 percent.

Rates

View Comments (0)