While you were sleeping: Yellen shows support
April 17 (BusinessDesk) – Wall Street rose after US Federal Reserve Chairman Janet Yellen reassured investors that the central bank will continue with its easy money policy to bolster the US economic recovery.
“The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained,” Yellen told the Economic Club of New York. “This approach underscores the continuing commitment of the FOMC [Federal Open Market Committee] to maintain the appropriate degree of accommodation to support the recovery.”
Meanwhile the latest economic reports provided further confirmation that the US weathered the colder-than-usual winter better than expected, as Yellen mentioned in today’s speech as well.
“In recent months, some indicators have been notably weak, requiring us to judge whether the data are signalling a material change in the outlook,” Yellen said. “The unusually harsh winter weather in much of the nation has complicated this judgment, but my FOMC colleagues and I generally believe that a significant part of the recent softness was weather related.”
In its latest Beige Book survey, the central bank said that reports from the 12 Fed Districts “suggest economic activity increased in most regions of the country since the previous report.”
Separately, US industrial production rose 0.7 percent in March, following an upwardly revised increase of 1.2 percent in February. The gain was better than expected.
Even so, another report showed housing starts climbed 2.8 percent in March to a seasonally adjusted annual rate of 946,000, which fell short of expectations.
"Several parts of the economy are warming up, but housing is the exception," Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania, told Reuters. "We are still on track for very strong second-quarter growth."
In afternoon trading in New York, the Dow Jones Industrial Average rose 0.82 percent, the Standard & Poor’s 500 Index added 0.63 percent, while the Nasdaq Composite Index gained 0.69 percent.
Advances in shares of Visa and 3M, up 2 percent and 1.8 percent respectively, led the Dow higher.
Shares of Yahoo rose, last up 5.9 percent, after the company posted better-than-expected quarterly sales while also receiving a boost from results of Alibaba, in which Yahoo owns a stake.
On the flipside, shares of Bank of America fell, last down 2.4 percent, after the bank posted another quarterly loss.
In Europe, the Stoxx 600 Index finished the session with a 1.3 percent climb from the previous close. The UK’s FTSE 100 advanced 0.7 percent, while France’s CAC 40 increased 1.4 percent, and Germany’s DAX climbed 1.6 percent.