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Dow Jones Industrial Average Dips as Russia Spooks the Street

The DJI halted its winning streak but maintained its footing atop 17,000

by 8/22/2014 4:22:48 PM
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The Dow Jones Industrial Average (DJI) spent most of the session modestly south of breakeven, save a brief period of post-Yellen upside. In a prepared speech at the central bank's annual symposium in Jackson Hole, Wyoming, the Fed head said that a quicker-than-expected recovery could result in a sooner-than-anticipated rate hike, but noted that the Fed's internal gauges suggest the unemployment rate overstates progress. It was the news outside of the U.S., however, that had the biggest impact on Wall Street, after NATO pointed to "an alarming build-up" of Russian forces near the Ukraine border. By the close, the Dow gave up 38 points, but maintained its perch atop 17,000.

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The Dow Jones Industrial Average (DJI - 17,001.22) surrendered 38.3 points, or 0.2%, but eked out a second straight finish atop 17,000. Just nine of the Dow's 30 components ended higher, led by Merck & Co., Inc.'s (NYSE:MRK) 0.5% advance. Cisco Systems, Inc. (NASDAQ:CSCO) and General Electric Company (NYSE:GE) paced the declining majority with roughly 1% drops. For the week, the Dow added 2%.

The S&P 500 Index (SPX - 1,988.40) pulled back from record highs, shedding 4 points, or 0.2%. The Nasdaq Composite (COMP - 4,538.55) fared the best of its peers, tacking on 6.5 points, or 0.1%, and extending its string of new 14-year highs, topping out at 4,547.24. For the week, the SPX gained 1.7%, while the COMP added 1.6%.

The CBOE Volatility Index (VIX - 11.47) spent most of the session north of breakeven, but turned lower in afternoon action, giving up 0.3 point, or 2.5%, to finish at a session low. For the week, the "fear gauge" swallowed a 12.8% loss.



5 Items on Our Radar Today:

  1. "Russian artillery support -- both cross-border and from within Ukraine -- is being employed against Ukrainian armed forces," said NATO Secretary General Anders Fogh Rasmussen. "Moreover, NATO is observing an alarming build-up of Russian ground and air forces in the vicinity of Ukraine." Earlier, Kiev called the unauthorized advance of Russian aid trucks a "direct invasion." Ukrainian President Petro Poroshenko and Russian President Vladimir Putin are expected to discuss the border instability at an economic summit next week in Minsk. (USA Today)
  2. The U.S. economy is getting closer to the central bank's targets, Fed Chair Janet Yellen said today at the annual Jackson Hole policy summit. However, she said, it's hard to gauge the remaining slack in the jobs market, and the Fed's internal barometers could indicate the unemployment rate is inflating progress. Meanwhile, European Central Bank (ECB) President Mario Draghi said he is "confident" that the June move to cut interest rates to record lows "will indeed provide the intended boost to demand, and we stand ready to adjust our policy stance further." However, amid the eurozone's "uniformly weak" recovery, the ECB will maintain an accommodative policy stance. (CNBC; Reuters, via CNBC)
  3. In equity news, Dynegy Inc. (NYSE:DYN) rallied on plans to buy assets from Duke Energy Corp (NYSE:DUK) and Energy Capital Partners.
  4. Option traders are gambling on a steeper descent for Las Vegas Sands Corp. (NYSE:LVS).
  5. Bank of America Corp (NYSE:BAC) option players, meanwhile, see an extended advance in the short term.

For a look at today's options movers and commodities activity, head to page 2.

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