Yellen and Fed raise flag over some equity valuations

July 15 Tue Jul 15, 2014 10:27am EDT

July 15 (Reuters) - Federal Reserve Chair Janet Yellen on Tuesday voiced concern about stretched valuations in certain corners of the equity markets, including the small cap, biotechnology and social media sectors.

While most valuations across equity markets remain generally in line with long-term averages, Yellen said in remarks to the Senate Banking Committee, the forward price-to-earnings multiples for smaller companies and those in the biotechnology and social media sectors appear "high relative to historical norms."

Yellen and other Fed officials, in the central bank's semi-annual Monetary Policy Report delivered to Congress in tandem with her testimony, also noted that the U.S. municipal bond market has functioned smoothly recently "but some issuers remained strained." (Reporting By Dan Burns; Editing by Chizu Nomiyama)

Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.