Yellen argued the U.S. economy is healthy enough for the Fed to raise rates and begin trimming back its massive bond portfolio, though low inflation and a low neutral rate may leave the central bank with diminished leeway, Reuters reports.
“Yesterday’s move was in response to Yellen comments that should inflation remain below the 2 percent target rate, the central bank will be less aggressive in their tightening program,” Sam Stovall, chief investment strategist at CFRA Research, told Reuters. “Today, the market is saying that’s old news and let’s focus on the matter at hand, which is earnings that will be coming out in earnest this week.”
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Quarterly earnings will start with big U.S. banks like JPMorgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC) and Citigroup (NYSE: C) reporting second quarter results on Friday.
According to Thomson Reuters, second quarter earnings are anticipated to rise 7.8% year-over-year after the first-quarter earnings revealed their best performance since 2011.
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