Stocks rise, US dollar down after Yellen signals rate rise

Fri Mar 3, 2017 4:51pm EST
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By Sinead Carew

NEW YORK (Reuters) - Wall Street stock indexes and the U.S. dollar both posted gains for the week on Friday after Federal Reserve Chair Janet Yellen confirmed market expectations for an interest rate rise in March but profit taking saw equities and the greenback slip for the day.

After regional Fed officials during the week mostly signaled the likelihood of a second policy rate rise in the past three months, in a speech on Friday Yellen confirmed the view that rates may rise at the next Fed meeting on March 14-15 barring any sharp deterioration in economic conditions.

The implied probability of a March rate hike surged to almost 80 percent from 77.5 percent the previous day, according to CME Group's FedWatch tool.

"She's telegraphed that March is not 'live' anymore, it is 'alive,'" said Quincy Krosby, market strategist, Prudential Financial, in Newark, New Jersey. "Financial conditions are supportive of a rate hike, and the Fed has been criticized in the past for not raising rates when financial conditions were supportive."

The S&P 500 and Nasdaq posted their sixth consecutive week of gains this week. Interest rate sensitive sectors such as real estate and utilities were among the decliners while financial stocks rose because rising rates tend to boost bank profits.

The Dow Jones Industrial Average .DJI rose 2.74 points, or 0.01 percent, to 21,005.71, the S&P 500 .SPX gained 1.2 points, or 0.05 percent, to end at 2,383.12 while the Nasdaq Composite .IXIC added 9.53 points, or 0.16 percent, to reach 5,870.75. The MSCI global stock index .MIWD00000PUS rose 0.1 percent for a record closing high.

European shares posted their best weekly gains of 2017, although they were down on the day following disappointing company updates.

The pan-European STOXX 600 .STOXX ended the day 0.1 percent lower after touching a 15-month high in the previous session and ended up 1.4 percent for the week.   Continued...

FILE PHOTO: A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S. December 28, 2016. REUTERS/Andrew Kelly/File Photo