US STOCKS-Wall St moves lower after Yellen says equity valuations high

  • Reuters
  • Stock Market News
US STOCKS-Wall St moves lower after Yellen says equity valuations high

* Yellen: Risks "moderated, not elevated"; no bubbles forming

* Private employers add fewest jobs since Jan 2014

* Tech stocks weigh; energy stocks gets boost from oil

* Indexes down: Dow 0.3 pct, S&P 0.2 pct, Nasdaq 0.2 pct (Adds details, changes comment, updates prices)

By Tanya Agrawal

May 6 (Reuters) - U.S. stocks moved lower in morning trading on Wednesday after U.S. Federal Reserve Chair Janet Yellen said equity valuations are "generally quite high," and warned of potential dangers.

However, Yellen described risks to financial stability as "moderated, not elevated" and said she does not see any bubbles forming. ID:nL1N0XX1BQ

The U.S. stock market has been choppy in the past few weeks as investors digest corporate results alongside a mixed bag of economic data.

The S&P 500 closed above its record high late last month, while the Nasdaq was in striking distance of its record high. But weak data has since pulled the indexes from these highs.

U.S. stocks opened slightly higher on Wednesday, but soon turned negative after Yellen's comments. Disappointing private jobs numbers also fueled concerns about the economy's potential to rebound from a first-quarter slump.

At 11:12 a.m. EDT (1512 GMT) the Dow Jones industrial average .DJI was down 52.08 points, or 0.29 percent, at 17,876.12, the S&P 500 .SPX was down 4.26 points, or 0.2 percent, at 2,085.2 and the Nasdaq Composite .IXIC was down 9.84 points, or 0.2 percent, at 4,929.49.

ADP payroll data showed U.S. private employers added 169,000 jobs last month, the fewest since January 2014 and far below economists' expectations, posing a downside risk for the more comprehensive nonfarm payrolls report on Friday. ID:nL1N0XX148

"We are more focused on Friday to see if those numbers are in line with the ADP numbers," said Tim Dreiling, a senior portfolio manager at U.S. Bank Wealth Management, which oversees $128 billion.

"If they come in weak, it certainly makes more improbable that we'll have a June lift-off and then maybe calls into question what happens in September."

Adding to the weak jobs data, applications for U.S. home mortgages fell last week as interest rates jumped, while nonfarm productivity fell in the first quarter as harsh winter weather weighed on output.

Stock markets globally have also been under pressure as the worldwide sell-off in government bonds deepened, spreading unease across all assets. ID:nL5N0XX338

Eight of the 10 S&P sectors were lower, with telecoms .SPLRCL the worst of the lot, while the energy index .SPNY gained 0.5 percent as oil prices hit fresh 2015 highs.

Tech stocks, led by Apple AAPL.O and Microsoft MSFT.O , were the biggest drag on the three major indices.

The weak data and bond markets as well as Yellen's comments overshadowed strong results from corporates and a mini revival in dealmaking.

MoneyGram MGI.O soared 23.72 percent to $9.65 after Bloomberg reported that Western Union WU.N was considering buying its smaller rival. Western Union rose as much as 9 percent to a record high of $22.84 ID:nL4N0XW4TK

Herbalife (NYSE: HLF ) HLF.N jumped 15.7 percent to $46.37 after it raised its full-year profit forecast. ID:nL4N0XW4HG

Synageva BioPharma GEVA.O soared 115.31 percent to $206.50 after Alexion ALXN.O offered to buy the company. Alexion was down 8.5 percent at $154.15. ID:nL4N0XX37G

Wendy's WEN.O rose 4.6 percent to $10.91 and EA EA.O gained 3.5 percent to $61.25 after the two companies reported better-than-expected results. ID:nL4N0XX3ID ID:nL4N0XW4D8

Declining issues outnumbered advancing ones on the NYSE by 1,969 to 994, for a 1.98-to-1 ratio on the downside; on the Nasdaq, 1,406 issues fell and 1,160 advanced for a 1.21-to-1 ratio favoring decliners. (Editing by Savio D'Souza)

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