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Dow reclaims 16,000 as stocks fly

Fed Chair Janet Yellen’s calm, confident testimony in front of Congress has inspired a strong rally on Wall Street.

The Dow boasted triple-digit gains today, as new Federal Reserve Chair Janet Yellen restored the confidence of investors on Wall Street in accommodative monetary policy being here for the long haul despite the unemployment rate already knocking on the door of one of the central bank’s thresholds.

There was nothing bold or new in Ms Yellen’s testimony, but her assurances that she would carry on in the same vein as her predecessor has helped to soothe any worries that tightening might be on the horizon. Also supporting equity prices was news that Republicans will be voting on a ‘clean’ debt limit bill (that is, a bill free of any conditions) to raise the debt ceiling for another year.

By early afternoon in New York, the Dow Jones was up 198 points or 1.25% at 16,000, while the S&P 500 rose 1.05% to 1818.8.

Ms Yellen stressed many of the same points made in the most recent Fed statement, saying she strongly supported the current monetary policy of the FOMC, having been one of the people who formulated it, and that if data continues to support the Fed’s outlook for improvements in the jobs market and a return to target for inflation then further tapers would be probable.

She also stressed that if unemployment reaches the Fed’s 6.5% threshold it would not mean any inevitable rate hike, instead it would mean the committee would consider the issue taking into account the state of the broader economy.

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