Janet Yellen smiles as she is introduced as being the first female to be nominated as Federal Reserve Board chair, prior to testifying on Capitol Hill in Washington.
(Photo: Jacquelyn Martin, AP)
(USA TODAY) -- U.S. stocks headed higher Tuesday as new Federal Reserve chief Janet
Yellen told Congress the Fed remains on track to reduce its economic
stimulus in "measured steps," despite recent weakness in job growth and
financial market turbulence in emerging markets.
In her prepared
comments, Yellen delivered no surprises as it relates to the Fed's exit
plan for its quantitative easing "tapering" plans. The Fed's first-ever
woman chair emphasized a "great deal of continuity in the (Fed's)
approach to monetary policy."
She also noted that the turbulence
in developing markets "does not pose a substantial risk to the U.S.
economic outlook," at least at this stage.
In morning trading, the
Dow Jones industrial average was up more than 120 points, or added
0.8%, the Standard & Poor's 500 index was 0.7% and Nasdaq composite
Michael Gapen, an economist at Barclays, viewed
Yellen's words as a sign that Fed policy remains virtually unchanged
under her leadership.
"The current policy framework will remain in
place and any change in the Fed's future policy stance will be based on
the data," Gapen told clients in a note.
Fed had been buying $85 billion worth of bonds every month in an effort
to stimulate the economy by pushing down commercial lending rates.
February's purchases would be $65 billion if the Fed sticks to its plan
to reduce the stimulus.
Appearing before a House committee, Yellen
painted a picture of a slowly improving economy with room for progress.
The Fed's stimulus pullback -- a policy endorsed by Yellen and her
predecessor Ben Bernanke -- is dependent on continuing signs of a
"The recovery in the labor market is far from
complete," Yellen said, an indication that the Fed is in no hurry to
boost short-term rates.
Benchmark U.S. oil for March delivery was
up 20 cents to $100.26 a barrel in electronic trading on the New York
Mercantile Exchange. The contract rose 18 cents on Monday to close at
Asian stocks traded higher on Tuesday. China's Shanghai
Composite added 0.8%to 2,103.67 and Hong Kong's Hang Seng jumped 1.8% to
In Europe, Britain's FTSE 100 rose 0.7% and Germany's DAX gained 1.3%.
The Associated Press contributed to this report.
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