Wall Street rises modestly following Yellen speech

NEW YORK - 26 August 2017: U.S. stocks rose slightly on Friday, lifted by high-dividend-paying stocks, after Federal Reserve Chair Janet Yellen stayed silent on monetary policy in a much-anticipated speech.

Interest-rate sensitive sectors such as telecommunications .SPLRCL, up 0.8 percent, and utilities .SPLRCU, up 0.3 percent, rose as Yellen’s speech did not comment on the path of interest rate hikes for the central bank, which sent U.S. Treasury yields lower.

“The worry still remains about the 10-year (benchmark Treasury note) rate, still below 2.2 percent,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

“That is kind of a concern and it doesn’t surprise me you are starting to see stocks hang in there only because everybody is searching for yield.”

Yellen’s speech at the annual meeting of central bankers in Jackson Hole, Wyoming focused on financial stability while giving no hint on monetary policy, leaving the prospect of more interest rate hikes up in the air.

She said the reforms put in place after the 2007-2009 financial crisis have strengthened the financial system, without impeding economic growth.

Meanwhile, a speech by European Central Bank chief Mario Draghi gave little guidance on tapering the bank’s bond holdings and heralded globalization over protectionism.

“If anything, both with Draghi and Yellen, the big fear from investors was a more hawkish stance on monetary policy,” said Jeffrey Cleveland, chief economist at Payden & Rygel in Los Angeles. “Those fears were overblown. You didn’t have that hawkish surprise.”

The euro EUR= rose to its highest in more than two years after Draghi’s comments while the dollar .DXY index weakened 0.75 percent. U.S. Treasury yields US10YT=RR fell.