The Dow rose to a record high close while U.S. stocks kept their upward momentum Wednesday following Federal Reserve Chair Janet Yellen’s congressional testimony to gradually raise interest rates.
Yellen’s speech was a nod to Wall Street as the Fed signaled it will gradually tighten policy and gradually unwind its massive balance sheet. A neutral interest rate level refers to one that neither encourages nor discourages economic activity.
Investors cheered Yellen’s dovish tone, alleviating some concerns over the recent dip in inflation.
“People were worried about her coming out more hawkish. She said exactly what the market expected and that’s why the market was happy with it,” said Chris Zaccarelli, chief investment officer at Cornerstone Financial Partners, based near Charlotte, North Carolina.