* Yellen cites housing, geopolitical tensions as economic
* Alibaba IPO filing pressures Yahoo shares
* Dow up 0.7 pct; S&P 500 up 0.6 pct; Nasdaq off 0.3 pct
(Updates to close)
By Angela Moon
NEW YORK, May 7 U.S. stocks mostly rose on
Wednesday after comments from Federal Reserve Chair Janet Yellen
signaled continued support for the economy, but the Nasdaq fell
for a second session as momentum names sold off.
Financials and utilities were the day's biggest gainers,
with the S&P financial sector index up 1.3 percent and
the utilities sector index up 1.6 percent.
On the Nasdaq, Yahoo! Inc fell 6.6 percent to
$34.07 after Alibaba Group filed for an initial public offering
that valued the Chinese e-commerce company well below analysts'
Analysts at BGC Partners and Atlantic Equities told Reuters
that Alibaba's valuation disappointed some Yahoo investors.
Yahoo holds a 22.6 percent stake in Alibaba, of which it must
sell more than a third through the IPO.
"The Alibaba IPO is drawing money out of Internet stocks
because investors have to raise capital for the Alibaba IPO.
That's why we see pressure on names like Google, Facebook and
Amazon today," said Tim Ghriskey, chief investment officer of
Solaris Group in Bedford Hills, New York.
Google shares fell 1 percent to $509.96 while
Facebook shares slid 2 percent at $57.39. Amazon.com Inc
declined 1.6 percent to $292.71.
Groupon Inc sank 20.7 percent to end at $5.33 as
its sales and profit projections for the current quarter trailed
Twitter Inc lost 3.7 percent to close at $30.66
after leading a selloff in Internet shares on Tuesday with an 18
The Dow Jones industrial average rose 117.52 points
or 0.72 percent, to close at 16,518.54. The S&P 500
gained 10.49 points or 0.56 percent, to end at 1,878.21. The
Nasdaq Composite dropped 13.085 points or 0.32 percent,
to finish at 4,067.673.
After declining in the morning session, the Dow and the S&P
500 moved into positive territory after Yellen said the U.S.
economy was still in need of lots of support, given the
"considerable slack" in the labor market in remarks to the
congressional Joint Economic Committee.
Yellen's comments enabled investors to shift attention to
what may be an easing of the tensions in Ukraine, as Russian
President Vladimir Putin called on pro-Moscow separatists in
Ukraine to postpone a vote on secession just five days before it
was to be held.
"Janet Yellen didn't say anything new in her testimony. She
continues to talk about how they are data dependent, how they
can change on a dime, but she didn't say rates are going up any
time soon, which is exactly what people expected," said Ken
Polcari, director of the NYSE floor division at O'Neil
Securities in New York.
"Coupled with the fact that technically the market found some
support, then (investors) started concentrating on what Putin
said," Polcari added.
Whole Foods Market Inc also contributed to the
Nasdaq's decline as the organic grocer's stock tumbled nearly 19
percent to $38.93.
The stock was the biggest drag on both the S&P 500 and
Nasdaq 100 indexes a day after Whole Foods posted
second-quarter results and cut its 2014 outlook.
Of 422 companies in the S&P 500 that had reported earnings
through Wednesday morning, 68.2 percent beat expectations, above
the 63 percent average since 1994, and exceeding the 66 percent
beat rate for the past four quarters, according to Thomson
Profits are expected to rise 5 percent this quarter, down
from 6.5 percent estimated at the start of the year, but above
the low of 0.6 percent in mid-April, according to Thomson
In the latest snapshot of the U.S. economy, the Labor
Department said that U.S. nonfarm productivity fell at its
fastest pace in a year in the first quarter because of severe
weather. That led to the largest gain in unit labor costs in
more than a year. Productivity fell at a 1.7 percent annual rate
in the quarter, the Labor Department said.
About 7 billion shares changed hands on U.S. exchanges, well
above the 6.1 billion average over the past five days, according
to data from BATS Global Markets.
Advancers outnumbered decliners on the New York Stock
Exchange by a ratio of nearly 2 to 1. On the Nasdaq, however,
about five stocks fell for every four that rose.
(Reporting by Angela Moon; Editing by Jan Paschal)