Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Fed Taper in Spotlight for the Dow Jones Today as Yellen Goes Back to Capitol Hill

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) was up 52 points, to 16,250, as of 1:30 p.m. after Federal Reserve Chairwoman Janet Yellen testified before a Senate panel on the central bank's monetary policy. The S&P 500 (SNPINDEX: ^GSPC  ) was up six points to 1,851.

The market has been waiting all week for Yellen's testimony before the Senate Banking, Housing, and Urban Affairs Committee. Many were dismayed to find out that the new Fed chief submitted the same prepared remarks that she used for her Feb. 11 testimony before the House Financial Services Committee.

Yellen did veer away from her prepared remarks at one point to comment on the potential connection between the tough winter weather and a recent spate of bad economic data: "Since my appearance before the House committee, a number of data releases have pointed to softer spending than many analysts had expected. Part of that softness may reflect adverse weather conditions, but at this point it is difficult to discern how much."

In the question and answer session that followed, Yellen indicated that the Fed is moving away from a specific unemployment target given that the unemployment rate is so close to their original target of 6.5%. She said: "Of course, the unemployment rate is not a sufficient statistic to measure the health of the labor market. As we go to a fuller consideration of how the labor market is performing, we need to take all of those things into account." It should be noted that this is not a new development, as the specific wording related to the Fed taper in Federal Open Market Committee statements has noted (italics are mine) "the current exceptionally low target range for the federal funds rate of 0 to 1/4 percent will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent."

The key point to take away from all this is that it looks like nothing has changed to make the Fed slow the tapering of its long-term asset purchases. As long as further data doesn't show a significant slowing of the economy I fully expect the Fed to announce another $10 billion taper of its asset purchases at its next policy meeting on March 18 and 19.

What's an investor to do?
In any event, your investment strategy shouldn't be dependent on the statements of the Fed. For me, the story remains the same. The economy continues to slowly grow, the jobs market is getting healthier, and the market is still overvalued. I'm holding some extra cash, continuing to educate myself, find great companies, and invest for the long term.

As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2857644, ~/Articles/ArticleHandler.aspx, 9/4/2015 6:41:50 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Dzombak

Dan Dzombak has written for The Motley Fool since 2008. He covers value investing, investing process, and success among other things. You can follow him on Facebook or Twitter by clicking the buttons below or head over to his blog at

Today's Market

updated 9 hours ago Sponsored by:
DOW 16,374.76 23.38 0.14%
S&P 500 1,951.13 2.27 0.12%
NASD 4,733.50 -16.48 -0.35%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/3/2015 4:35 PM
^DJI $16374.76 Up +23.38 +0.14%
^GSPC $1951.13 Up +2.27 +0.12%
S&P 500 INDEX CAPS Rating: No stars