NEW YORK (TheStreet) -- Janet Yellen's ascension to the chair of the Federal Reserve is a bullish development for the stock market, especially for companies in the banking and energy sectors such as JPMorgan (JPM), Wells Fargo (WFC), Exxon Mobil (XOM) and Phillips 66 (PSX).
As detailed in a previous article on TheStreet, Yellen was pro-growth in her Senate testimony, supporting the present policy of quantitative easing, the acquiring of Treasury bonds and other securities by the Fed to keep interest rates low. Current Fed chairman, Ben Bernanke, has supported easy-money policies as a way to try to spur growth.
Economic growth increases the demand for the goods and services of banks and oil companies. As businesses expand, money is borrowed to pay for the new operations. Other financial services are needed to facilitate economic growth, such as lending for homes, education and vehicles.
When economies expand, so does the need for oil and natural gas. Power is needed for factories, farms and other facilities. Petroleum is also needed for fertilizers, chemicals, paints and other products that are consumed more in an expanding economy. The transportation sector always takes off when an economy is surging, which means there is a need for more oil and natural gas to fuel cars, trucks, planes, trains and ships.
The greater the demand for banking and energy, the higher the prices go for those assets as per the fundamentals of supply and demand.
That was demonstrated in the performance of these sectors and individual stocks during the last year, Natural gas rose more than any other commodity in 2013. Financial services was the second best performing sector, up 42.82%.