Weekly reviews

Flat opening in Wall Street; Yellen’s speech and data in focus

Wall Street indexes refreshed record highs on Tuesday, as market participants reacted on hawkish remarks from Federal Reserve Chairwoman Janet Yellen.

For a third day in a row, the Dow Jones industrial average was supported by Goldman Sachs stocks. The S&P 500 was also pushed by financial components, moving to its 15th record high since November 8. The Nasdaq composite advanced on the back of Apple’s intraday jump.

  • Dow Jones Industrial Average: +0.45 percent / 20,504.41 points

  • Standard & Poor’s 500: +0.40 percent / 2,337.58 points

  • Nasdaq Composite: +0.32 percent / 5,782.57 points

Fed’s top director expressed confidence that the economy is moving on the right track to proceed with a gradual interest rate hike. The regulator said in December that rates could be increased as much as three times in 2017.

"Waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession," said Yellen in a prepared speech.

According to Yellen’s words, employment and inflation rate developments will be closely monitored by the Federal Open Market Committee in order to define the right time for new hikes.

While the US central bank mentioned three possible increases in its December monetary policy meeting, market players are currently betting on June and December. Expectations for a rate hike in March jumped from 16 to 23 percent after Yellen’s comments.

Economic reports on Tuesday included the producer price index for January, which came in at 0.6 percent, above expectations for a 0.3 percent growth. Also, the American Petroleum Institute reported a much larger-than-expected build in US crude inventories. According to data, stockpiles added 9.94 million barrels last week, while analysts had forecasted a 3.5 million barrel increase.

Today, investors will keep eyes wide open as a batch of key economic reports are due to be published on Wednesday. Building permits and housing starts for January will be released at 13:30 GMT, with economists pointing at a 0.2 and 0.1 percent build respectively. At the same time, initial jobless claims and Philadelphia Fed Manufacturing index are set to be presented.

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