US stocks rise as Yellen boosts stimulus bets
Stocks on the American exchanges received a boost after Janet Yellen reaffirmed her support for record stimulus. The soon-to-be Chairman of the Federal Reserve told the Senate Banking Committee the economy is still in need of government support, and that the Fed’s measures are the “surest path to returning to a more normal approach to monetary policy.”
Yellen has been among the more vocal supporters of record stimulus. Over the past week market participants have speculated whether the Fed could pare bond purchases sooner than expected to account for stronger than forecasted GDP and employment growth. Yellen’s testimony seemingly quelled that possibility, as the incoming Fed boss looks to maintain the government’s role in the recovery efforts.
Yellen’s testimony is a “signal the Fed is not going to reduce its support for the economy any time soon,” said Sung Won Sohn of California State University.
The Standard & Poor’s 500 Index extended its record high, climbing more than 8 points to 1,790.62. The Dow Jones Industrial Average also extended its record, rising more than 54 points to 15,876.20. All but eight of the Dow’s 30 members reported gains, led by The Walt Disney Co (NYSE:DIS) , The Boeing Co (NYSE:BA) and The Home Depot (NYSE:HD) , each rising at least 1.44 percent. Equities have been firmly supported by record stimulus and a stronger than forecasted earnings season. Three-quarters of the 460 S&P 500 companies to report earnings this season have beat revenue forecasts, according to Bloomberg.
Yellen is committed to maintain the regime set forth by current Fed Chairman Ben Bernanke, whose second term ends January 31. Yellen refused to acknowledge a set time for reducing the pace of asset purchases. A median estimate of economists surveyed by Bloomberg believes the first round of rate cuts could come our way in March.
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