* Rates won’t have to rise too much to reach neutral level –
* Temporary factors appear to be holding down inflation –
* Fed to release Beige Book at 2 p.m. ET
* Indexes up: Dow 0.69 pct, S&P 0.67 pct, Nasdaq 0.83 pct
(Adds details, changes comment, updates prices)
By Sweta Singh and Tanya Agrawal
July 12 (Reuters) – U.S. stocks were higher in late morning
trading on Wednesday, with the Dow hitting a record, after
Federal Reserve Chair Janet Yellen said interest rates hikes
would be gradual and will not have to rise much further to reach
the neutral rate.
Yellen, in a prepared testimony delivered to Congress, said
the economy is healthy enough to absorb further gradual rate
increases and the slow wind down of the Fed’s massive bond
The testimony depicted an economy that, while growing
slowly, continued to add jobs, benefited from steady household
consumption and a recent jump in business investment.
Investors and some Fed officials, concerned with the recent
dip in inflation, have been wanting to see a surer progress
toward the central bank’s goal of 2 percent inflation.
Yellen said some temporary factors appear to be at work in
holding down inflation but the Fed was focused on achieving the
“It was a little bit more dovish than most had thought,”
said Richard Scalone, co-head of foreign exchange at TJM
Brokerage in Chicago.
“She said rates won’t have to rise much further to get to
neutral, I thought that was key. She said inflation response to
economy is a key uncertainty, alluding to the inflation again,
part of the dovishness.”
The U.S. central bank will also issue its Beige Book at 2
p.m. ET, a compendium of anecdotes on the health of the economy.
The Fed’s next policy meeting is on July 25-26.
At 10:47 a.m. ET (1447 GMT), the Dow Jones Industrial
Average was up 146.9 points, or 0.69 percent, at
21,555.97. It had hit a record of 21580.79.
The S&P 500 was up 16.48 points, or 0.67 percent, at
2,442.01 and the Nasdaq Composite was up 51.59 points,
or 0.83 percent, at 6,244.89.
All 11 major S&P 500 sectors were higher, with the defensive
utilities index’s 0.91 percent rise leading the
The financial index, which is sensitive to rate
hikes, pared early losses to trade little changed.
Chances of an interest rate hike at the Fed’s December
meeting fell to 53 percent from 60 percent after the release of
Yellen’s testimony, according to CME Group’s FedWatch tool.
Investors will be keeping an eye on second-quarter earnings
reports on Friday from big U.S. banks including JPMorgan Chase
, Wells Fargo and Citigroup.
Stocks of Amazon.com edged up 0.7 percent after the
online retailer said its Prime Day sale was the biggest shopping
event by sales in its history. The stock was among the biggest
boosts on the Nasdaq.
Advancing issues outnumbered decliners on the NYSE by 2,416
to 376. On the Nasdaq, 2,088 issues rose and 565 fell.
(Reporting by Sweta Singh and Tanya Agrawal in Bengaluru,
Additional reporting by Sinead Carew in New York; Editing by