* 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 climbed to fresh highs Thursday after U.S. Federal Reserve Chair nominee Janet Yellen told a Senate committee that the Fed's accommodative policies would continue as long as the economy remains fragile.
The Nasdaq was under pressure, weighed by Cisco Systems Inc , after the networking giant reported disappointing results on Wednesday. Cisco shares dropped nearly 12 percent.
Yellen's Q&A followed late gains in the market Wednesday ahead of the release of her prepared remarks. In her testimony, Yellen said the Fed's current $85 billion in monthly bond purchases "cannot continue forever," and that the Fed was "monitoring and assessing (risks) carefully."
"I think it's becoming quite clear that Vice Chair Yellen will be continuing with an accommodative stance for some time... markets are breathing a little bit of a sigh of relief," said Ryan Larson, head of equity trading at RBC Global Asset Management.
Cisco shares were on track to post their worst day since Feb. 10, 2011, slumping 11.8 percent to $21.18 after it warned its revenue would dive as much as 10 percent this quarter and keep contracting until after the middle of 2014.
Cisco's retreat weighed down the information technology sector, which fell 0.65 percent, but the other nine sectors were higher, boosted by confidence that Yellen will continue the Fed's current policies.
Since the beginning of the year, the S&P has gained 25.4 percent and the Dow 21 percent, thanks to the Fed's massive bond-buying stimulus.
"Stock prices have risen pretty robustly but I think if you look at traditional valuation measures - the kind of things we monitor akin to price-equity ratios - you would not see prices that 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. The Nasdaq Composite Index was down 2.27 points, or 0.06 percent, at 3,963.30.
Wal-Mart shares rebounded after earlier losses, rising 0.2 percent to $79.08 at midday after the world's largest retailer reported lower-than-expected quarterly sales. Kohl's slid 7.6 percent to $53.85 after the department store chain reported weaker-than-expected results.
Earlier in the day, the Labor Department said the number of Americans filing new claims for unemployment benefits fell 2,000 to a seasonally adjusted 339,000. Claims for the prior week were revised to show 5,000 more applications than previously reported. The market barely reacted to the data.
In Europe, data showed the euro zone economy grew at a slower than expected 0.1 percent rate in the third quarter, which could hurt investors' appetite for equities.
Fairholme Capital Management proposed to buy the insurance businesses of Fannie Mae and Freddie Mac, a move that seeks to resolve the uncertain future of the mortgage financiers.