Yellen warns on small cap and momo sector valuations

|By:, SA News Editor

Sticking to what we mostly already know about Fed thinking, Janet Yellen - in prepared remarks before the Senate Banking Committee - says interest rates could rise sooner and at a faster pace if labor market strength continues to surprise to the upside. The opposite, she quickly notes, is also true - should data disappoint, policy would be more accommodative than currently anticipated.

Treasurys are zigging and zagging on her remarks, but about flat, and the S&P 500 and Dow remain little-changed. Small caps (IWM -0.7%) and momentum sectors like social media (SOCL -1.1%) and biotech (IBB -1.1%) are selling off as the Fed boss says their valuations "appear to be stretched."

The Q&A is underway; live blog and video here.