Ukraine, Fed talk weigh on stocks

This Aug. 19, 2013 file photo shows the New York Stock Exchange in New York.  European stock markets turned lower on Friday, Aug. 22, 2014, while Wall Street was expected to open flat, amid concerns of an escalation in the Ukrainian crisis after a Russian aid convoy entered the country.

This Aug. 19, 2013 file photo shows the New York Stock Exchange in New York. European stock markets turned lower on Friday, Aug. 22, 2014, while Wall Street was expected to open flat, amid concerns of an escalation in the Ukrainian crisis after a Russian aid convoy entered the country.

Saturday, August 23, 2014

NEW YORK -- The stock market paused Friday, after four days of gains, after a speech by Federal Reserve Chairman Janet Yellen left investors unsure about how the nation's most important financial voice feels about raising interest rates in the coming months.

A flare-up in tensions between Ukraine and Russia also weighed on the market after a Russian convoy entered the country, reportedly to carry in aid supplies.

The Dow Jones industrial average fell 38.27 points, or 0.2 percent, to 17,001.22. The Standard & Poor's 500 index lost 3.97 points, or 0.2 percent, to 1,988.40, and the Nasdaq composite added 6.45 points, or 0.1 percent, to 4,538.55.

It was a quiet day overall. Stocks moved between small gains and losses, then mostly settled modestly lower in the last couple of hours. Trading was slow, as it has been all week, as the summer winds down and with many investors on vacation. It was the second-quietest day of the year for trading on the New York Stock Exchange.

Even with Friday's modest losses, it was a strong week for the stock market. The S&P 500 rose 1.7 percent for the week, its best five-day performance since April.

The Fed dominated investors' agendas this week. On Friday, Yellen addressed an annual conference of central bankers and other policymakers from around the globe at the Fed's annual conference in Jackson Hole, Wyo.

In her speech, which focused on labor markets, Yellen said the recession complicated the Fed's ability to assess the U.S. job market and made it harder to determine when to adjust interest rates.

"I think this was business as usual for Yellen. She was measured and deliberate and the market had a minimal reaction to it," said Michael Fredericks, portfolio manager of BlackRock's Multi-Asset Income Fund, which has $8.8 billion in assets.

The timing of a Fed rate increase remains unclear; however most investors expect the first one to come sometime in 2015. Yellen's speech came two days after a report from the Fed seemed to show a growing chorus of policymakers wanting to raise interest rates.

"The uncertainty that policymakers feel on numerous fronts was evident in Yellen's speech," John Hoff, a fixed-income strategist at the Royal Bank of Scotland, wrote in a note to investors.

The Fed has kept its benchmark short-term interest rate, known as the federal funds rate, near zero since late 2008 in order to simulate economic activity and demand. The downside to low interest rates is the possibility that they can lead to inflation.

The federal funds rate helps determine interest rates on a variety of financial products including mortgages and credit cards, as well as the yields that bonds pay. Many investors believe the U.S. economy has recovered enough from the depths of the financial crisis to warrant higher interest rates.

U.S. government bond prices were little changed, a sign that investors were hesitant to make any large bets after Yellen's speech. The yield on the 10-year Treasury note edged down to 2.40 percent.

Benchmark U.S. crude oil fell 31 cents to $93.65 a barrel in New York. In metals trading, gold rose $4.80 to $1,280.20 an ounce, silver fell 3 cents to $19.39 an ounce, and copper rose 3 cents to $3.20 a pound.

Business on 08/23/2014