U.S. stocks rebounded this morning following Federal Reserve chair Janet Yellen’s speech on Thursday in which she made it clear that she still expects interest rates to go up sometime this year.
Yellen gave her most detailed reasons for raising rates in the upcoming months, including building inflation pressures. Europe was pleased with the speech and all the major indices there moved higher. The Dow Jones Industrial Average jumped over 186 points to 16,384, the S&P 500 added 15 points to 1,947 and the Nasdaq climbed 41 points to 4,776.
It was a tale of two athletes as Nike once again delivered strong numbers, while Finish Line lagged. First, Nike stock jumped over 7 percent in early trading to $123 after once again beating earnings estimates. The sportswear giant delivered profits of $1.18 billion or $1.34 a share, a 22 percent increase over last year’s $962 million or $1.09 a share. Analysts had expected the company to earn $1.19 cents a share. There was no evidence of an economic slowdown in China, where sales jumped by 51 percent.
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That wasn’t the same story at Finish Line. The athletic shoe chain delivered revenue in the second quarter of $483 million, which was light of the consensus estimate of $491 million. As a result, the stock was sliding in 14 percent in early trading to $21.26. The company also forecast FY16 earnings to be $1.67, also lower than the expectations of $1.80. Sales were tracking to the low end of the sales range and the company blamed the later Labor Day for the weakness in the second quarter. Finish Line said that its Macy’s shops continue to perform well. The company benefited from retro sneaker styles and Nike brands.
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In economic news, the Commerce Department said GDP rose at a 3.9 percent pace, which was much better than the expectations of 3.7 percent. Consumer spending was revised to 3.6 percent from 3.1 percent, boosted by cheap gas prices and improving home values that increase household wealth.
Looking ahead, the odds of a government shutdown next week have increased with the announcement that Speaker John Boehner will resign at the end of October. Republicans have wanted to defund Planned Parenthood and they were willing to keep stop funding government operations in order to do so.