Dow Closes at Record High as Investors Prepare for Start of Earnings Season

The three major U.S. equity indexes closed higher on Thursday in a mostly lackluster trade as investors continued to digest comments from Wednesday and fresh remarks from U.S. Federal Reserve Chair Janet Yellen in her second day of testimony before the U.S. Senate Banking Committee.

Prices traded in a tight range as investors prepared for the start of the second-quarter earnings season and the release of a major consumer inflation report on Friday. Providing the most support was a strong performance in the retail sector, mostly led by a 4.8 percent gain in shares of Target stock.

The SPDR S&P Retail exchange-traded fund (XRT) jumped 2.3 percent and posted its best trading day of the year.

The Dow Jones Industrial Average rose 20.95 points, bringing it to a record close at 21,553.09 and Dow Transports also hit a record high earlier in the session.

Fed Chair Janet Yellen’s Testimony

Yellen commented on numerous topics on Thursday, ranging from monetary policy to banking regulation to President Trump’s agenda. However, her remarks didn’t have the same impact on the financial markets as they did on Wednesday when she revealed her concerns over muted inflation and its possible impact on future interest rate hikes and monetary policy.

In prepared remarks released on Wednesday, Yellen gave no clear indication about the future course of interest rate hikes but did say the Fed is likely to begin unwinding its $4.5 trillion bond portfolio later this year.

Among the various topics discussed on Thursday, Yellen added, uncertainty surrounding Trump’s policy agenda is “quite high” and that 3% GDP growth in the next 2 years would be difficult. She also added that she believes opioid abuse could be holding back the U.S. economy.

“I think fiscal policy…uncertainty is quite high at the moment,” Yellen said, referring to policies that Congress and the White House control.

Yellen also added that changes to the U.S. health-care system is one factor causing uncertainty in the economic outlook.

“Spending on health care is an important aspect of household budgets, and changes there could have an effect on spending on a wide range of goods and services in the economy. And access to health care is important, Yellen told the Senate Banking Committee.

Economic News

In U.S. economic news, the U.S. producer price index rose 0.1 percent in June. This came in slightly better than the 0.0% forecast. Weekly jobless claims, came in a little above expectations at 247,000.

Stock market volume was light as Wall Street looked ahead to the start of earnings season. JPMorgan Chase, Wells Fargo and Citigroup are set to report Friday morning.