Wall Street rises as US Fed chief says case for rate rise stronger

Wall Street rises on Friday morning, minutes before a speech by Federal Reserve Chair Janet Yellen.
Wall Street rises on Friday morning, minutes before a speech by Federal Reserve Chair Janet Yellen.PHOTO: REUTERS

WASHINGTON (REUTERS) - Wall Street was higher on Friday morning after Federal Reserve Chair Janet Yellen said the case for raising United States interest rates has strengthened in recent months.

Ms Yellen, speaking before a gathering of global central bankers in Jackson Hole, Wyoming, did not indicate when the Fed would raise rates, but said the central bank thinks future hikes should be "gradual".

"In light of the continued solid performance of the labour market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months," Ms Yellen said in prepared remarks.

All 10 major S&P 500 sectors were higher. Financials , which stand to gain the most if rates are raised, jumped 0.78 per cent.

At 10:24 a.m. EDT (10:24 p.m Singapore time), the Dow Jones Industrial Average was up 104.33 points, or 0.57 per cent, at 18,552.74. The S&P 500 was up 13.91 points, or 0.64 per cent, at 2,186.38 and the Nasdaq Composite was up 37.84 points, or 0.73 per cent, at 5,250.04. The dollar index pared losses to trade largely flat.

"Yellen wants to set the table for a September hike, but perhaps only deliver the hike in November or December," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, in Menomonee Falls, Wisconsin.

The markets have been on tenterhooks all of this week in the run-up to Ms Yellen's speech. Wall Street has dropped about 0.5 per cent from Monday through Thursday.

A report on Friday showed the US economy grew at a slower pace than previously estimated for the second quarter.

However, consumer spending, which makes up more than two-thirds of economic activity, was revised up to show it increased at the fastest rate since the fourth quarter of 2014.