* Financials power Wall Street to record
* Yellen warns about delaying rate hike
* Dollar reverses course in wake of Yellen comments
(Updates with European markets close)
By Chuck Mikolajczak
NEW YORK, Feb 14 Financial stocks propelled Wall
Street to a record on Tuesday and the dollar strengthened as
U.S. Federal Reserve Chair Janet Yellen struck a hawkish tone on
the timing of an interest rate hike.
Yellen told the U.S. Senate Banking Committee the central
bank will likely need to raise interest rates at an upcoming
meeting, although she expressed caution about the considerable
economic policy uncertainty under the Trump administration.
Financial stocks moved higher following her remarks
and were last up 1.1 percent, on track for their fourth straight
advance. Utilities and real estate, which
tend to weaken in a rising rate environment, were last down 0.9
percent and 0.8 percent, respectively.
The Fed signaled in December that it expected to raise rates
three times in 2017.
The dollar reversed course after Yellen's comments and was
last up 0.3 percent after touching a three-week high of 101.38
against a basket of major currencies.
"People want to put money into that because they want to
believe that growth will be stronger, that inflation will be
more of an issue - a more normal economy, in other words," said
Paul Christopher, head market strategist for Wells Fargo
Investment Institute in St. Louis.
Thomson Reuters data shows traders see a 17.7 percent chance
of a 25-basis-point hike in rates at the Fed's March meeting.
The greenback was initially under pressure following the
resignation of President Donald Trump's national security
adviser, Michael Flynn, who quit over revelations he had
discussed U.S. sanctions against Moscow with the Russian
ambassador to the United States before Trump took office.
Yellen's hawkish tone dovetailed with recent comments from
other Fed officials.
Dallas Fed President Robert Kaplan on Monday argued the Fed
should move soon to avoid falling behind the curve, especially
as fiscal policy could drive faster growth and inflation.
Earlier on Tuesday, Richmond Fed President Jeffrey Lacker said
the central bank will likely have to raise interest rates more
rapidly than financial markets currently expect.
"If they wanted to raise rates a third time and they wanted
to start priming the pump or preparing the markets, especially
the equity markets, now would be the time to do it," said
The Dow Jones Industrial Average rose 64.25 points,
or 0.31 percent, to 20,476.41, the S&P 500 gained 7.03
points, or 0.30 percent, to 2,335.28 and the Nasdaq Composite
added 14.26 points, or 0.25 percent, to 5,778.22.
The gains put the S&P on track for its fourth straight
MSCI's all-country world index edged up 0.01
percent, putting it on track for its first decline in five
session. Europe's broad FTSEurofirst 300 index edged
down 0.04 percent to snap a five-session winning streak.
Yields on benchmark U.S. 10-year Treasury notes climbed to
2.4752 percent, down 12/32 in price, after hitting a high of
Oil pared gains on Tuesday as concerns about rising supply
from U.S. shale output overshadowed an OPEC-led effort to cut
global output, which has supported oil prices in a higher range.
Brent crude was last up 0.9 percent at $56.07 and U.S.
crude was up 0.6 percent at $53.26 a barrel.
(Additional reporting by Richard Leong; Editing by Dan Grebler
and Nick Zieminski)