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Biotech, Social Media Stocks Are Less Frothy Than Janet Yellen Thinks

NEW YORK (TheStreet) -- A month after Federal Reserve Chair Janet Yellen said they were overvalued, Internet and biotech stocks continue to push to new highs.

Both the First Trust Dow Jones Internet Index (FDN) and SPDR S&P Biotech (XBI) exchange-traded funds led markets higher Wednesday, fueled by the better-than-expected earnings season and improving outlooks.

Read More: 8 Stocks George Soros Is Buying in 2014

The Internet ETF is heavily weighted towards Facebook (FB), Amazon.com (AMZN), eBay (EBAY), Netflix (NFLX) and LinkedIn (LNKD).

The biotech ETF is comprised mostly of Puma Biotechnology (PBYI), Insmed (INSM), Pharmacyclics (PCYC), Vertex Pharmaceuticals (VRTX), Gilead Sciences (GILD).

FDN Chart
FDN data by YCharts

Last month, Yellen signaled during her testimony on policy that interest rates will likely remain low and monetary policy will remain "accommodative," but she identified social media and some biotech stocks as looking "frothy." Yellen warned that investors may be reaching for yield and perhaps taking on too much risk.

Read More: 7 Stocks Jim Cramer Sees Ripe for Takeover

These comments sparked a selloff in both sectors and contributed to the decline in U.S. equities over the past month. But recently the ETFs representing social media and biotech surged higher as impressive quarterly results have strengthened the fundamental outlook of each sector.

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