The S&P 500 Index rose less than 0.1 percent to 2,172.61 at 11:53 a.m.in NY, after rising as much as 0.7 percent.
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“In the light of the continued solid performance of the labour market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months”, Dr Yellen said in prepared remarks. Investors now see an 18 per cent probability the Fed will raise rates at its September policy meeting and a 53 per cent chance of an increase by December, according to futures data.
The last time the United States central bank raised interest rates was at the end of 2015.
The Dow Jones industrial average fell 53 points, or 0.3 percent, to 18,395.
Janet Yellen, chair of the US Federal Reserve, has left the door open for a hike as early as next month.
John Briggs, head of strategy at RBS, said the market had expected her to be somewhat hawkish but it took comments from Fischer reinforcing that the economy is improving and the Fed’s objectives are getting closer to emphasize that September is in play.
Stock markets in Toronto and NY made gains in the morning following the speech, with the Toronto Stock Exchanges’s S&P/TSX composite index soaring more than 100 points.
ANALYST TAKE: Yellen’s speech is “the big event” of the day and has the potential to “create waves within the calmness that has prevailed throughout this month”, said Margaret Yang, market analyst at CMC Markets Singapore.
Trading in bonds and equities has remained becalmed all week as investors looked ahead to Yellen’s speech, set for 10 a.m. The yield on the 10-year note fell to 1.54 percent from 1.56 earlier Friday.
“If the market continues to see a September hike, the 2-year yield could near 1 percent”, Briggs said.
Combined with the 0.8 per cent growth pace in the first quarter, the world’s largest economy grew 1 per cent in the first half of this year.
In company news, Herbalife HLF.N lost 2.3 percent to $60.50 after a report said Carl Icahn, the nutritional supplement maker’s top shareholder, was looking to sell his stake. USA stocks almost flat-lined immediately after Yellen’s comments, but surged soon after, with all 10 major S&P 500 sectors trading higher.
OIL: Benchmark U.S. crude oil shed 25 cents to $47.09 a barrel from $47.33.
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The Fed officials’ comments pushed the dollar higher against a basket of currencies. On the Nasdaq, 1,781 issues rose and 807 fell.The S&P 500 index showed 27 new 52-week highs and one new low, while the Nasdaq recorded 94 new highs and 12 new lows.
