Stocks rally, dollar gains on Yellen's remarks
Global equity markets rallied, with the Dow hitting a new high, the dollar gained and bond yields tumbled on Wednesday after Federal Reserve Chair Janet Yellen dampened growing expectations of more than one interest rate hike later this year.
In remarks to the House Committee on Financial Services, Yellen said the U.S. economy is strong enough to absorb further gradual rate increases and the slow wind down of the Fed`s massive bond portfolio.
The testimony depicted an economy that is growing, albeit slowly, and continues to add jobs as it benefits from steady household consumption and a recent jump in business investment.
Given current estimates, the federal funds rate "would not have to rise all that much further" to reach a neutral level that neither encourages nor discourages economic activity, Yellen said in her prepared testimony.
Equities markets rose on the view the Fed`s monetary policy is not going to be as aggressive as some had anticipated, said Larry Hatheway, chief economist at asset management firm GAM.
"The Fed isn`t really going to upset the apple cart," Hatheway said. "There`s some softening here of what the Fed is going to do at least around rates. It doesn`t necessarily answer the question around its balance sheet."
MSCI`s gauge of stocks across the globe gained 0.90 percent while the pan-European FTSEurofirst 300 index of leading regional shares rose 1.64 percent and emerging market stocks rose 1.10 percent. .
On Wall Street, the Dow Jones Industrial Average rose 130.65 points, or 0.61 percent, to 21,539.72, above a high set July 3. The S
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