Stocks Move Mostly Higher In Reaction To Yellen's Speech - U.S. Commentary

(RTTNews) - After seeing initial weakness, stocks have moved mostly higher over the course of the trading session on Tuesday. The markets have benefited from a positive reaction to comments by Federal Reserve Chair Janet Yellen.

Currently, the major averages are all positive, although the Nasdaq is outperforming its counterparts. While the Nasdaq is up 55.52 points or 1.2 percent at 4,822.31, the Dow is up 53.45 points or 0.3 percent at 17,588.84 and the S&P 500 is up 10.17 points or 0.5 percent at 2,047.22.

The strength that has emerged on Wall Street comes on the heels of Yellen's speech on the economic outlook and monetary policy to the Economic Club of New York.

Yellen's comments have largely been perceived by the markets as dovish regarding the outlook for interest rates.

In prepared remarks, Yellen said she considers it appropriate for the Fed to proceed cautiously in adjusting monetary policy given the risks to the economic outlook.

The Fed chief said the caution is especially warranted because the central bank's ability to use conventional monetary policy to respond to economic disturbances is asymmetric with rates still at such low levels.

"If economic conditions were to strengthen considerably more than currently expected, the FOMC could readily raise its target range for the federal funds rate to stabilize the economy," Yellen said.

She added, "By contrast, if the expansion was to falter or if inflation was to remain stubbornly low, the FOMC would be able to provide only a modest degree of additional stimulus by cutting the federal funds rate back to near zero."

The speech has largely offset recent speculation that the Fed will raise interest rates at its next meeting toward the end of April.

Gold stocks have subsequently shown a strong move to the upside, as the price of the precious metal has moved notably higher in reaction to Yellen's remarks.

With gold for April delivery climbing $16.70 to $1,236.80 an ounce, the NYSE Arca Gold Bugs Index has surged up by 4.4 percent.

Networking, internet, computer hardware stocks are also seeing considerable strength, contributing to a standout gain by the tech-heavy Nasdaq.

On the other hand, notable weakness remains visible among banking and oil service stocks, limiting the upside for the broader markets.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index slipped by 0.2 percent, while China's Shanghai Composite Index tumbled by 1.3 percent.

Meanwhile, European stocks moved mostly higher on the day. The French CAC 40 Index advanced by 0.9 percent and the German DAX Index rose by 0.4 percent, although the U.K.'s FTSE 100 Index bucked the uptrend and closed just below the unchanged line.

In the bond market, treasuries have climbed firmly into positive territory on the heels of Yellen's remarks. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.1 basis points at 1.819 percent.