US STOCKS-Dow, S&P touch new highs as Yellen speaks; Cisco sinks

Reuters

* Yellen says she does not see asset bubbles

* Cisco shares tumble after revenue warning

* Walmart recovers after earlier drop on weak results

* Dow up 0.3 pct, S&P up 0.4 pct, Nasdaq off 0.1 pct

By Luke Swiderski

NEW YORK, Nov 14 (Reuters) - The Dow and S&P indexes climbedto fresh highs Thursday after U.S. Federal Reserve Chair nomineeJanet Yellen told a Senate committee that the Fed'saccommodative policies would continue as long as the economyremains fragile.

The Nasdaq was under pressure, weighed by Cisco Systems Inc, after the networking giant reported disappointingresults on Wednesday. Cisco shares dropped nearly 12 percent.

Yellen's Q&A followed late gains in the market Wednesdayahead of the release of her prepared remarks. In her testimony,Yellen said the Fed's current $85 billion in monthly bondpurchases "cannot continue forever," and that the Fed was"monitoring and assessing (risks) carefully."

"I think it's becoming quite clear that Vice Chair Yellenwill be continuing with an accommodative stance for some time...markets are breathing a little bit of a sigh of relief," saidRyan Larson, head of equity trading at RBC Global AssetManagement.

Cisco shares were on track to post their worst day sinceFeb. 10, 2011, slumping 11.8 percent to $21.18 after it warnedits revenue would dive as much as 10 percent this quarter andkeep contracting until after the middle of 2014.

Cisco's retreat weighed down the information technologysector, which fell 0.65 percent, but the other nine sectors werehigher, boosted by confidence that Yellen will continue theFed's current policies.

Since the beginning of the year, the S&P has gained 25.4percent and the Dow 21 percent, thanks to the Fed's massivebond-buying stimulus.

"Stock prices have risen pretty robustly but I think if youlook at traditional valuation measures - the kind of things wemonitor akin to price-equity ratios - you would not see pricesthat suggest bubble-like conditions," Yellen said.

The Dow Jones industrial average was up 42.95 points,or 0.27 percent, at 15,864.58. The Standard & Poor's 500 Index was up 6.85 points, or 0.38 percent, at 1,788.85. TheNasdaq Composite Index was down 2.27 points, or 0.06percent, at 3,963.30.

Wal-Mart shares rebounded after earlier losses,rising 0.2 percent to $79.08 at midday after the world's largestretailer reported lower-than-expected quarterly sales. Kohl's slid 7.6 percent to $53.85 after the department storechain reported weaker-than-expected results.

Earlier in the day, the Labor Department said the number ofAmericans filing new claims for unemployment benefits fell 2,000to a seasonally adjusted 339,000. Claims for the prior week wererevised to show 5,000 more applications than previouslyreported. The market barely reacted to the data.

In Europe, data showed the euro zone economy grew at aslower than expected 0.1 percent rate in the third quarter,which could hurt investors' appetite for equities.

Fairholme Capital Management proposed to buy the insurancebusinesses of Fannie Mae and Freddie Mac, amove that seeks to resolve the uncertain future of the mortgagefinanciers.

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