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While President Donald Trump's pro-business stance sparked a
record-setting rally in equities, he has given scant detail on
his policies, giving the Fed limited visibility on the direction
of the economy.
Richmond Fed President Jeffrey Lacker said the central bank will
likely have to raise rates more rapidly than the markets
currently expect given that any new policies by the Trump
administration, while uncertain, will force the Fed's hand.
The Fed in December projected three rate hikes this year.
Currently, traders have priced in a mere 17 percent chance of a
rate move in March, despite a spate of strong economic data
including a robust labor market and improving inflation.
Yellen starts her testimony before the Senate Banking Committee
at 10:00 a.m. ET (1500 GMT).
"The market is pricing in good times ahead but the question is
whether the administration is going to be able to deliver on the
promises made," said Andre Bakhos, managing director at Janlyn
Capital in Bernardsville, New Jersey.
"The world listens to what Yellen has to say and her speech does
have a potential to create an interesting reality check."
At 9:35 a.m. ET the Dow Jones Industrial Average was down 2.72
points, or 0.01 percent, at 20,409.44. The S&P 500 was down 1.57
points, or 0.06 percent, at 2,326.68 and the Nasdaq Composite
was down 8.88 points, or 0.15 percent, at 5,755.08.
The S&P on Monday topped $20 trillion for the first time ever,
the culmination of a rally that started Thursday after Trump
vowed to make a major tax announcement soon.
Nine of the 11 major S&P sectors were lower on Tuesday, with
technology and consumer staples weighing the most.
General Motors was the top gainer on the S&P, rising 3.8 percent
after Peugeot-owner PSA Group said it is in talks to buy GM's
European Opel business.
The prospects of sector consolidation caused Fiat to jump 3.3
percent, while Ford gained 0.7 percent.
Cynosure jumped 27.9 percent to $65.87 after Hologic said it
would acquire the medical aesthetics company for $1.65 billion.
Hologic fell 2.6 percent to $38.89.
Declining issues outnumbered advancers on the NYSE by 1,499 to
1,049. On the Nasdaq, 1,393 issues fell and 805 advanced.
The S&P 500 index showed 14 new 52-week highs and no new lows,
while the Nasdaq recorded 31 new highs and nine new lows.
(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by
Savio D'Souza)
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