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U.S. stocks rebound after Fed's Brainard speech

Xinhua, September 13, 2016 Adjust font size:

U.S. stocks pared early losses and closed higher on Monday, as investors sifted through remarks by U.S. Federal Reserve officials.

The Dow Jones Industrial Average gained 239.62 points, or 1.32 percent, to 18,325.07. The S&P 500 was up 31.23 points, or 1.47 percent, to 2,159.04. The Nasdaq Composite Index rose 85.98 points, or 1.68 percent, to 5,211.89.

Fed Governor Lael Brainard, a voting member of the central bank's policymaking committee, said in a speech in Chicago on Monday that while economic progress continues it would be wise for the Fed to keep monetary policy loose.

"Brainard thinks asymmetric risk in the 'new normal' economy calls for monetary prudence in the removal of policy accommodation. She will not be pushing for a hike in next week's FOMC meeting," said Jay Morelock, an economist at FTN Financial, in a note.

Atlanta Fed President Dennis Lockhart, however, said current economic conditions called for a "serious discussion" on rates at the September meeting, media reported.

"What this has done is force traders across every asset class to re-price their merchandise," said Stephen Guilfoyle, chief market economist at Stuart Frankel & Co., Monday.

Boston Fed President Eric Rosengren said in a speech last week that low interest rates are increasing the chance of overheating the U.S. economy. Gradually tightening monetary policy is appropriate to maintaining full employment, he added.

Traders have expected a 24 percent rate hike in September, according to CME Group's FedWatch tool.

The Federal Open Market Committee, the Fed's monetary policy arm, is set to meet on Sept. 20-21. Enditem