Stocks mostly higher amid Fed’s warnings

U.S. stocks crept higher as Janet Yellen warned that the Federal Reserve should be wary of tightening monetary policy too gradually. The dollar gave back some earlier gains and Treasuries added to losses.

The S&P 500 Index all but erased its increase in the final 30 minutes of trading to finish essentially unchanged, while technology shares climbed and small caps rose to a record. Bloomberg’s dollar index, which had jumped the most since January in early trading, retreated but remained positive as the Fed chair said raising interest rates gradually is the appropriate policy stance considering the uncertainty surrounding inflation. Yields on 10-year treasuries held at 2.23 percent.

“It looks like the committee is headed toward a December hike unless something disappoints on the inflation side,” Dennis DeBusschere, head of portfolio strategy at Evercore ISI, said by phone. “But beside that, it’s total uncertainty because Yellen is less likely to be here after that. What the speech seemed to do is give you a lot of different scenarios, all of which will be the job for the new Fed chair to handle.”

The euro fell to a fiveweek low following the steepest drop of the year on Monday after U.K. Prime Minister Theresa May’s comments on Brexit negotiations. The yen pared some of the previous day’s gains, which followed North Korea’s declaration it could shoot down U.S. warplanes. WTI crude declined, though was still close to a fivemonth high after Turkey threatened to shut down Kurdish crude shipments. Emerging market shares tumbled.

Markets have been oscillating between risk-on and risk-off stances since early August as tensions simmer on the Korean Peninsula. Now, an assortment of geopolitical risks appear set to further cloud the outlook, not least the worry that gains by far-right parties in Germany’s vote signal a new populist bent in Europe.

The Standard & Poor’s 500 edged up a fraction of a point to 2,496. The Dow Jones industrial average slipped 11 points, less than 0.1 percent, to 22,284. The Nasdaq composite rose 9 points to 6,380.