While you were sleeping: Yellen lifts US dollar as Wall St stalls

The US dollar strengthened while Wall Street stalled after Federal Reserve chairwoman Janet Yellen warned against the central bank moving "too gradually" on tightening monetary policy.

"A gradual approach is particularly appropriate in light of subdued inflation and a low neutral real interest rate, which imply that the FOMC [Federal Open Market Committee] will have only limited scope to cut the federal funds rate should the economy be hit with an adverse shock," she said in prepared remarks for a speech in Cleveland, Ohio.

"But we should also be wary of moving too gradually."

At the close of trading in New York, the Dow Jones Industrial Average fell into the red late in the session, losing11.77 points, or 0.05%, to 22,284.32. Earlier, it reach a high of 22,361 as technology stocks recovered from Monday's selloff.

The Nasdaq Composite Index rose 0.15% to 6380.16 while the Standard & Poor's 500 Index was unchanged at 2496.85.

US Treasuries slipped, pushing yields on the 10-year note one basis point higher to 2.23%.

'Fed in a quandary'
"The Fed is in a bit of a quandary," Phil Blancato, chief executive of Ladenberg Thalmann Asset Management in New York, told Reuters. "The market is concerned about the Fed being aggressive, perhaps pushing us to a place where we don't want to be, whether it's an inverted yield curve or recession."

The Dow was buoyed by Apple and IBM, up 2.1% and 0.7% respectively, while McDonald's and DowDuPont led the falls, down 1.6% and 0.9% respectively.

The VIX, or the Chicago Board Options Exchange Volatility Index which measures expectations of future volatility in stocks, slipped 0.4% to 10.17.

In the latest US economic data, a Conference Board report showed its consumer confidence index fell to 119.8 in September, down from 120.4 in August, the highest reading in five months.

In Europe, the Stoxx 600 Index was little changed. France's CAC 40 Index eked out a 0.03% gain, while Germany's DAX Index rose 0.1% and the UK's FTSE 100 Index fell 0.2%.

Nestlé lifts margin target
Switzerland's Nestlé rose after the world's top packaged-food company set a profit margin target amid activist investor Dan Loeb's calls for improved performance.

Nestlé set an underlying trading operating profit margin target of 17.5-18.5% by 2020, up from 16.0% in 2016, the company said in a statement.

The target was enough to quieten calls for change, Thomas Russo, a Nestlé shareholder for more than 30 years whose firm Gardner Russo & Gardner has a stake worth more than $US1 billion, told Reuters.

"It gives them the ability to stay at work without having the distraction of whether they'll concede a margin guidance, but at the same time not burden themselves from making the kind of bold investments that are required to deliver long-term value," he said.

Nestlé shares closed 1.8% higher in Zurich.

"I can tell you put a lot of work into this," Mr Loeb told chief financial officer Francois-Xavier Roger as the two chatted about Nestlé's presentation in London afterward, Bloomberg reported. "You did a great job."

(BusinessDesk)