Wall Street closes day with robust gains as markets cheer Yellen's testimony
Major equity indexes in the U.S. closed the day higher as the Fed Chairwoman Janet Yellen's remarks improved the market sentiment. Although the indexes eased back a little in the closing hour, this move seemed to be due to profit-taking.
Yellen, in the first part of her testimony, said that the Fed is planning to unwind its massive balance sheet later this year. She further added that the Fed is looking to continue to gradually tighten its policy but she also noted that they would not need to have to rise much further to reach a neutral level.
Commenting on Yellen's statements, "people were worried about her coming out more hawkish. She said exactly what the market expected and that's why the market was happy with it," Chris Zaccarelli, chief investment officer at Cornerstone Financial Partners based in Charlotte, South Carolina, told Reuters.
After reaching a record high during the day, the Dow Jones Industrial Average closed the day 123.07 points, or 0.57%, higher at 21,532.14. The S&P 500 added 15.38 points, or 0.63%, to 2,439.88, and the Nasdaq Composite gained 52.42 points, or 0.85%, to 6,238.90.
Headlines from the U.S. session:
- Fed's George: Fed's large balance sheet poses potential threat to financial stability
- DXY: under pressure but making a minor recovery from key support
- White House statement on Trump Jr’s was that it is “ridiculous” - UOB
- Fed Beige Book: Most districts expect modest to moderate economic gains
- Trump unlikely to appoint Yellen 2nd term - UOB
- Fed's Yellen speech: Balance sheet could shrink to normal levels by 2022
- Fed's Yellen speech: Given current taxing and spending decisions, debt is unsustainable
- Fed's Yellen speech: As short term interest rates rise, banks will compete for deposits, raise deposit rates
- Fed's Yellen speech: We recognize dangers of persistent undershooting 2% inflation objective
- Fed's Yellen speech: Very focused on trying to achieve 2% inflation target