Stocks rise as Yellen gives upbeat talk on economy

The Fed Chair was optimistic regarding the economy, concluding that interest rate hikes are very likely.

Yellen said the case to raise interest rates is getting stronger as the USA economy approaches the central bank’s goals.

But after a small initial rise on Wall Street in the slipstream of Yellen’s comments, the Dow Jones Industrial Average drifted, losing 0.4 per cent mid-session, while the tech-heavy Nasdaq and the broad-based S&P 500 indices also reversed early gains. Eastern time. The Standard & Poor’s 500 index added 9 points, or 0.5 percent, to 2,182.

“The monetary stimulus and negative interest rate policies of several central banks outside the U.S. continue to drive demand for U.S. Treasury bonds as investors search for positive yields, despite abating concerns over the fallout from Brexit”, Fleming said. “Ultimately, we think Yellen’s speech really doesn’t give us anything new”.

Yellen’s speech on Friday notwithstanding, not everyone is convinced a rate hike is coming soon.

Hunter pointed to a government report Friday that the economy, as measured by the gross domestic product, grew at an anemic 1.1 percent annual rate last quarter as evidence that the Fed likely wants to see stronger growth. Freeport McMoRan, a copper miner, rose almost 3 percent. The yield was 1.58 percent late Thursday.

Pantheon Macroeconomics chief economist Ian Shepherdson said that with inflation still below the target, “action remains contingent on the data, and our expectation of an abrupt slowing in hourly earnings growth in August – temporary, and due exclusively to calendar effects – means the next employment report is unlikely to send an unambiguous message that the Fed should hike immediately”. But since then, global economic pressures, financial market turmoil and a brief slump in the USA job market have kept the Fed on the sidelines.

European stocks advanced, however, while oil and Treasury prices came off highs as investors across asset classes parsed the details of Yellen’s presentation, markets’ central focus of the week.

Nine of the 10 major S&P 500 indexes were lower. That would be the fourth quarter in a row of drops. This past week, the 30-year fixed rate remained stable, averaging 3.43 percent through Wednesday, which was 41 basis points lower than the year earlier level, Freddie Mac reported.

In Asia, Japan’s Nikkei 225 fell 1.2 percent after consumer prices fell the most in three years in July. The price of West Texas Intermediate oil, the USA benchmark, was up 20 cents to $47.53, while the price of Brent crude, the global benchmark, increased 5 cents to $49.72.

Brent crude futures was trading at $49.58 a barrel.

Wholesale gasoline was little changed at $1.52 a gallon, heating oil slipped 1 cent to $1.50 a gallon and natural gas rose 2.5 cents to $2.871 per 1,000 cubic feet.

CURRENCIES: The dollar rose to 101.72 yen from 100.57 yen the previous day. The euro fell to $1.1209 from $1.1281.