Dollar slides after Yellen speech; S&P at 2016 high

Tue Mar 29, 2016 5:08pm EDT
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By Rodrigo Campos

NEW YORK (Reuters) - The U.S. dollar dropped sharply and stocks on Wall Street ended at 2016 highs after Federal Reserve Chair Janet Yellen said the Fed should proceed "cautiously" in deciding when to raise interest rates.

"Given the risks to the outlook, I consider it appropriate for the Committee to proceed cautiously in adjusting policy," Yellen said in remarks to the Economic Club of New York.

Yellen's comments, her first since the Fed held rates steady two weeks ago, appeared to contradict recent hawkish comments from several of her colleagues.

The dollar fell sharply against a basket of currencies in reaction to Yellen and dollar-priced commodities pared losses. The Thomson Reuters Core Commodity index .TRJCRB was down 0.6 percent after earlier falling as much as 1.4 percent.

"Yellen took the dovish side in the great Fed debate and markets are reacting uniformly to her comments," said John Augustine, chief investment officer at Huntington National Bank.

Crude oil prices cut losses in late trading after data showed a smaller-than-expected increase in inventories.

On Wall Street, technology shares led gains in major indexes and both the S&P 500 and Dow Industrials closed at their highest levels of 2016.

The Dow Jones industrial average .DJI rose 97.72 points, or 0.56 percent, to 17,633.11, the S&P 500 .SPX gained 17.96 points, or 0.88 percent, to 2,055.01 and the Nasdaq Composite .IXIC added 79.84 points, or 1.67 percent, to 4,846.62.   Continued...

A man walks through the lobby of the London Stock Exchange in London, Britain August 25, 2015. REUTERS/Suzanne Plunkett