US stocks end at record highs as financial shares rally after Yellen signals rate rise

Federal Reserve chair Janet Yellen presented an upbeat view of the economy in her testimony to Congress, noting labour market conditions continue to improve and inflation is inching up to the Fed’s 2 per cent target.
Federal Reserve chair Janet Yellen presented an upbeat view of the economy in her testimony to Congress, noting labour market conditions continue to improve and inflation is inching up to the Fed’s 2 per cent target.PHOTO: EPA

NEW YORK (AFP) - Wall Street stocks pushed to fresh records again on Tuesday (Feb 14), with financial shares rallying after Federal Reserve chair Janet Yellen signalled higher interest rates are on their way.

All three major US indices set records for the fourth straight session, with the Dow Jones Industrial Average up 0.5 per cent to end the day at 20,504.41.

The broad-based S&P 500 gained 0.4 per cent to close at 2,337.58, while the tech-rich Nasdaq Composite Index climbed 0.3 per cent to 5,782.57.

 

Yellen presented an upbeat view of the economy in her testimony to Congress, noting labour market conditions continue to improve and inflation is inching up to the Fed’s 2 per cent target.

She confirmed the next rate increase could come at any time, which leaves open the possibility of a move at the March 14-5 policy meeting.

Bank of America jumped 3.1 per cent and JPMorgan Chase rose 1.6 per cent following the Yellen hearing. Banks typically prosper from interest rate increases.

US stocks have been on a tear since President Donald Trump last week said he planned to unveil a tax-cut plan within the next two to three weeks.

Consumers stocks were strong with Wal-Mart Stores and Home Depot both gaining 1.0 percent. Technology giant Apple won 1.3 per cent to finish at an all-time high.

General Motors jumped 4.8 per cent after French carmaker PSA said it was considering an acquisition of Opel and Vauxhall, GM’s loss-ridden European subsidiaries. GM confirmed the talks, cautioning that “there can be no assurance that an agreement will be reached.”

Health insurer Anthem fell 0.2 per cent after rival Cigna announced it was suing Anthem for billions of dollars in breakup and other fees after a US court blocked their proposed merger on antitrust grounds. Anthem said the suit was invalid and that it was committed to completing the merger. Cigna gained 0.8 per cent.