October 31, 2014
Stocks rally, dollar gains on Yellen 'stay course' remarks
The dollar rose and global equity markets rallied after Federal Reserve Chair Janet Yellen said she expects the US central bank to continue trimming its bond purchases, a sign the Fed believes the economy is on track to grow further.
Stock indexes on Wall Street surged 1 percent or more, while the US currency rebounded against the euro and gained against the yen after Yellen's testimony before the House Financial Services Committee.
The benchmark S&P 500 posted its best four-day performance in 13 months, gaining 3.9 percent over the period, and was within 1.7 percentage points of its all-time high reached a month ago.
On Wall Street, the Dow Jones industrial average rose 192.98 points, or 1.22 percent, to 15,994.77. The S&P 500 gained 19.91 points, or 1.11 percent, to 1,819.75 and the Nasdaq Composite added 42.871 points, or 1.03 percent, to 4,191.045.
Stocks in Canada, Europe and emerging markets also rallied as Yellen emphasized continuity in the Fed's policy, saying she strongly supports the path of her predecessor, Ben Bernanke.
MSCI's all-country world index, which measures stock performance in 45 countries, rose 1.02 percent and its emerging markets index gained 1.1 percent.
In Europe, the FTSEurofirst 300 index of leading regional shares closed up 1.25 percent, while stock markets in Brazil and Mexico jumped more than 1.5 percent. Shares on Bay Street in Toronto rose 0.63 percent.
The dollar came off nearly two-week lows after Yellen signaled there would no immediate deviation from the Fed's winding down of its massive bond purchases.
The US currency jumped 0.36 percent against the Japanese yen to 102.61, while the euro fell 0.05 percent to 1.3637 against the dollar.
US Treasuries slid after Yellen said she strongly supported the Fed's monetary policy strategy, suggesting its current reduction in bond purchases was on track. Her remarks dispelled fears the economy was worse than expected.
The interest rate on US one-month Treasury bills fell to the lowest in over a week on signs of progress to raise the federal debt ceiling. Such a move would avert the government delaying payments on its debt.
The price of benchmark 10-year Treasury notes fell 13/32, to yield 2.7259 percent.
Gold hit a three-month high and oil prices rose, with Brent crude edging above $109 a barrel.
Brent crude rose 5 cents to settle at $108.68 a barrel. US crude edged down 12 cents to settle at $99.94.
US COMEX gold futures for April delivery settled up $15.10 an ounce at $1,289.80.