U.S. equities and stock exchange traded funds turned positive in mid-Tuesday after Federal Reserve Chairwoman Janet Yellen pointed to strengthening economic cues that could support short-term interest rate hikes.
The markets were led by the financial sector, with the widely observed Financial Select Sector SPDR (NYSEArca: XLF) up 1.1%.
Yellen argued that delaying rate hikes could force the Fed to raise benchmark interest rates in quick spurts, which could risk impeding the economy, reports Yashaswini Swamynathan for Reuters.
“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,” Yellen said.
However, Yellen warned of uncertainty under President Donald Trump, especially concerns over his administration’s economic policies. Trump’s expansionary economic promises have helped fuel a record-setting rally in U.S. equities, but the new president has shown a dearth in clarity his pledged policies.