U.S. Stocks Lower After Yellen Fuels Rate-Hike Jitters

(RTTNews) - U.S. stocks were generally lower Friday after hawkish remarks from Federal Reserve Chair Janet Yellen, who said the central bank will likely raise interest rates this year, as long as economic activity picks up.

In a speech to the Chamber of Commerce in Providence, R.I., Yellen said transitory factors were mostly to blame for first quarter weakness.

Limping into the long weekend, the S&P 500 closed 4.76 points, or 0.2%, lower at 2,126.06, but gained 0.2% this week. The Dow Jones Industrial Average closed 53.72 points, or 0.3%, lower to 18,232.02, for a 0.2% weekly loss.

The Nasdaq Composite index ended the session down 1.43 points at 5,089.36, but booked a 0.8% gain for the week.

The choppy trading on Wall Street also followed the release of the Labor Department's closely watched report on consumer price inflation.

While the report said the headline consumer price index rose in line with economist estimates, core prices rose by more than expected.

The Labor Department said its consumer price index inched up by 0.1 percent in April after rising by 0.2 percent in each of the two previous months. The modest increase matched economist estimates.

The core consumer price index, which excludes food and energy prices, rose by 0.3 percent in April following two consecutive 0.2 percent monthly increases.

The increase in core consumer prices exceeded the 0.1 percent uptick that was anticipated by economists.

Compared to the same month a year ago, the report said consumer prices were down by 0.2 percent, while core prices were up by 1.8 percent.

Paul Ashworth, Chief U.S. Economist at Capital Economic said, "Overall, with the employment cost index suggesting that wage growth is accelerating and the CPI indicating that underlying price inflation is rising, the Fed can't wait forever before beginning to raise interest rates from near-zero."

"September is still the most likely lift-off date, but July is not out of the question, particularly not if we get another couple of robust rises in core consumer prices in May and June," he added.

Most of the major sectors are showing only modest moves, contributing to the lack of direction being shown by the broader markets.

Gold stocks continued to struggle, adding to big weekly losses. The PHLX Gold/Silver Index was down 5.4 percent for the week. Drug makers were a bright spot today, as reflected in a modest advance for the NYSE Arca Biotech Index.

Stocks in the news included Deere, which reported a 30% drop in fiscal second-quarter profit. Still, shares rose 4.5 percent.

Hewlett-Packard added 2.8 percent after earnings beat expectations last night.

U.S. crude oil ended snapped a two-day gain to end lower on Friday, as the dollar strengthened against a select band of currencies.

Light Sweet Crude Oil futures for July delivery, the most actively traded contract, lost $1.00 or 1.7 percent, to settle at $59.72 a barrel on the New York Mercantile Exchange.