Yellen however said that the case for a rate hike had strengthened thanks to improvements in the labour market and expectations for solid economic growth, reiterating that future increases should be “gradual”.
Advertisement
David Donabedian, chief financial officer of Atlantic Trust Private Wealth Management, said in a note that the market’s initially positive reaction may have been attributable to “her relaxed view on inflation”, which suggested “a very slow path toward higher rates”.
OIL: Benchmark U.S. crude oil rose 23 cents to $47.56 a barrel.
YELLEN UPBEAT: Fed Chair Yellen said in a speech that the Fed is moving toward raising interest rates in light of a solid job market and an improved outlook for the US economy and inflation.
The Dow Jones industrial average rose more than 100 points at one point, but soon relinquished those games.
The Fed raised rates in December, its first hike in almost a decade, but it has held off further increases so far this year due to a global growth slowdown, financial market volatility and generally tepid USA inflation data.
All 10 major S&P 500 sectors were higher. The Standard & Poor’s 500 index was down 0.2% and the Nasdaq composite index was flat. The Nasdaq composite climbed 27 points, or 0.5 percent, to 5,239.
Meanwhile, Cleveland Fed President Loretta Mester on Friday on CNBC echoed the recent hawkish sentiments of other Fed members, saying “it makes sense” to start moving interest rates higher. “Investors will closely watch for cues on Fed chair’s thinking to fine-tune the trajectory of Fed rate hike”, Citi said.
“I see nothing in this speech that would motivate me to believe the Fed moves in September”, said Jamie Cox, managing partner of Harris Financial Group.
“We think most officials will want to see more concrete evidence of a rebound in GDP growth and a rise in inflation towards the 2 percent target, with a December move still appearing the most likely outcome”, said Andrew Hunter, an economist with Capital Economics.
Advertisement
Anheuser-Busch InBev NV (ABI.BT)(ABI.BT) warned Friday its beer megamerger with SABMiller PLC (SAB.JO) could lead to thousands of job losses (http://www.marketwatch.com/story/ab-inbev-warns-3-to-be-laid-off-in-merger-2016-08-26) in the coming years. Stocks rose in early trading Friday, Aug. 26, 2016, following two days of declines after Federal Reserve Chair Janet Yellen gave an upbeat assessment on the USA economy. A handful of stocks rose after reporting results that were better than analysts had expected. Separately, data showed the US trade gap narrowed more than expected in July.
