Dovish Yellen Spurs Markets to Soar
U.S. stocks climbed to another record close on Friday, driven by continued prospects of low interest rates and by strong second-quarter corporate earnings reports, particularly from the banks.
The main force behind the rally was the dovish performance by Federal Reserve Chair Janet Yellen in Congress on Wednesday and Thursday, when she reiterated that rate hikes would most likely be gradual. On balance, her remarks were interpreted as evidence of continued accommodative monetary policy, and from there, stocks were off to the races. The ignition of the rally can almost be time-stamped to her appearance. Before her speech, the market was down for the week.
Last week, the Dow Jones Industrial Average rose 1%, or 223 points, to 21,637.74, and the Standard & Poor’s 500 index was up 1.4%, or 34 points, to 2459.27. Both were all-time highs. The Nasdaq soared 2.6%, to 6312, its second-highest finish ever.