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1st LD Writethru: U.S. stocks extend losses on Yellen's comments

Xinhua, May 7, 2015 Adjust font size:

U.S. stocks retreated further on Wednesday following a sharp decline in the previous session, as U. S. Federal Reserve Chair Janet Yellen warned that the equity market valuations appeared "quite high."

The Dow Jones Industrial Average fell 86.22 points, or 0.48 percent, to 17,841.98. The S&P 500 decreased 9.31 points, or 0.45 percent, to 2,080.15. The Nasdaq Composite Index lost 19.68 points, or 0.40 percent, to 4,919.64.

"My assessment at this point would be that risks to financial stability are moderated, not elevated at this point," Yellen said at the "Finance and Society" conference held at the International Monetary Fund Wednesday.

But she stressed low interest rates can certainly create risks for financial stability, saying there are potential dangers, such as high equity market valuations, compressed spreads on high-yield debt, and deterioration in underwriting standards for leveraged loans.

Another potential risk that Yellen pointed out was low long- term interest rates, which could move up rapidly after the Fed raised rates.

Adding negative sentiment to the market, U.S. private jobs data came out much weaker than expected.

Private sector employment increased by 169,000 jobs in April compared with the previous month, well below market expectations, according to the April ADP National Employment Report on Wednesday.

"The oil states are experiencing a significant growth slowdown, just as happened the last time oil prices fell so far so fast. Add a much stronger dollar, reminiscent of 1986, and manufacturing is being pinched along with mining. The mining retrenchment should pretty much run its course by the end of the first half. Until then, both economic and job growth are likely to be slower than the Fed would like," said Chris Low, chief economist at FTN Financial, in a note.

In corporate news, LendingClub Corp spiked 4.15 percent to 18. 31 dollars apiece Wednesday after reporting better-than-expected quarterly results. The online lending company announced its operating revenue in the first quarter of 2015 was 81.0 million U. S. dollars, an increase of 109 percent year-over-year. Endite