Janet Saves the Market

A rather quiet day of trading got a big boost shortly after noon, thanks to dovish comments from Janet Yellen. Speaking at Economic Club of New York, the Fed Chairwoman said that there’s no rush to raise interest rates.

“Given the risks to the outlook, I consider it appropriate for the committee to proceed cautiously in adjusting policy, ” Ms. Yellen said. She didn’t give details about the timing of the next rate increase.

This really isn’t news. She’s reiterated what she said after the last Fed meeting.

“Although the baseline outlook has changed little on balance since December, global developments pose ongoing risks,” she said. “These risks appear to have contributed to the financial market volatility witnessed both last summer and in recent months. ”

(…)

The hits to the economy “have been at least partially offset by downward revisions to market expectations for the federal funds rate that in turn have put downward pressure on longer-term interest rates, including mortgage rates, thereby helping to support spending, ” she said. “For these reasons, I anticipate that the overall fallout for the U.S. economy from global market developments since the start of the year will most likely be limited, although this assessment is subject to considerable uncertainty. ”

Before the remarks, the S&P 500 was trading around 2,035. The index quickly jumped to 2,045 and then took another step to 2,050. Last Monday, the S&P 500 closed at 2,051.60, which was its highest close this year.

The dollar dropped and many dividend-friendly stocks were rewarded.

Posted by on March 29th, 2016 at 2:19 pm


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