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Market Update

Yellen Offers Optimism on U.S. Growth Outlook, ECB Struggles

Author: Nichole Harper
Last Update: 12:17 PM ET December 03 2015

[12:15 PM New York City, New York – U.S. Federal Reserve Chair Janet Yellen offered positive economic assessment and highlighted stable employment and widening economic recovery. Across the Atlantic, the European Central Bank fell short of expected additional stimulus measures. Stocks in New York and the euro zone lacked momentum.

Stocks struggled in New York and U.S. Fed Reserve Chair Janet Yellen offered optimistic view on the health of the economy.

In a prepared statement to lawmakers, Yellen laid out the familiar case of stable employment and gradual economic recovery and he confidence that inflation will reach to the target laid out by the central bank over time.

Seasonally adjusted weekly jobless claims increased 9,000 to 269,000 from the previous week’s unrevised claims of 260,000, the U.S. Department of Labor said.

The preliminary insured unemployment rate in the week ending November 21 was 1.6% unchanged from the prior week''s unrevised rate.

New orders for manufactured goods in October jumped $6.8 billion or 1.5% to $473.9 billion, followed by 0.8% decrease in September.

Excluding transportation, new orders decreased -0.1%, the Department of Commerce reported.

On Wall Street, Tollbooth Strategy Index slipped 41.82 or 0.4% to 10,939.94.

S&P 500 index fell 6.18 or 0.3% to 2,073.26 and the Nasdaq Composite Index slid 10.45 or 0.2% to 5,113.88.

Crude oil in New York added 21 cents to $40.15 a barrel and gold gained $3.40 to $1,057.10 an ounce.

U.S. Movers

Medtronic Plc (MDT) rose 1.9% or $1.44 to $77.61 after the medical technology and services provider reported revenues in the second-quarter ending in October jumped 6% from a year ago to $7.1 billion.

Net income in the quarter tumbled 37.2% to $520 million or 36 cents per diluted share compared to $828 million or 83 cents per share from the same quarter last year.

For the second half of fiscal 2016, the company forecasted revenue growth to be in the upper-half of its mid-single digit and diluted non-GAAP earnings per share in the range of $4.33 to $4.40.

Sears Holdings Corp (SHLD) decreased 1.7% or 37 cents to $20.16 after the department stores operator said revenues in the third-quarter ending in October plummeted 19.4% from a year ago to $5.8 billion.

Kmart comparable store sales in the quarter declined 7.5% and Sears domestic comparable store sales in the quarter plunged 9.6%.

Net loss in the quarter narrowed to $454 million or $4.26 per diluted share compared to $548 million or $5.15 per share from the same quarter last year.

European Markets

European bourses abruptly changed direction and headed south in the afternoon, after the European Central Bank announced its decision on economic stimulus, which failed to meet the high expectations of investors.

In a highly anticipated announcement, the ECB said it cuts the overnight deposit rate deeper into negative zone to -0.3% from -0.2%, in an effort to stimulate bank lending.

The central bank is also extending its monthly €60 billion bond-buying program to at least March 2017, or by a minimum of six months.

ECB president Mario Draghi said the bond-buying stimulus, or the quantitative easing program, is successful, but an extension is necessary to deal with the prolonged low inflation.

The inflation is running at 0.1%, significantly below the 2% target set by the central bank,

The main interest rate remains unchanged at a record low of 0.05% and the central bank just lowered rate deeper in negative territory, meaning charging more to banks for parking funds with the ECB.

Following the announcement, the euro surged against the dollar, rising more than two cents to $1.08.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc