Federal Reserve Chair Janet Yellen was in the hotseat, the GOP tried again with healthcare, and banks kicked off earnings season. Here's what you need to know.

Where Markets Ended

What a week. 

The Dow Jones Industrial Average logged three straight record closes to round out the week, while the S&P 500 ended at its own all-time high on Friday, July 14. The Nasdaq had reason to celebrate, too. The tech-heavy index enjoyed its best weekly gain of 2017, climbing 2.6%. 

There are three reasons why this market is overvalued, Christopher Versace wrote over on our premium site for investors, Real Money. Get his insights with a free trial subscription.

Yellen Heads to Capitol Hill

Federal Reserve Chair Janet Yellen headed to Capitol Hill on Wednesday, July 12, and Thursday, July 13. The two-day affair is part of her semiannual appearance before lawmakers known as the Humphrey-Hawkins testimony.

Her testimony to the House Financial Services Committee and Senate Banking Committee soothed fears of a central bank moving too fast, while bolstering confidence in the U.S. economic recovery.

In her House testimony, Yellen reiterated that rate increases would be gradual. Like Fed Gov. Lael Brainard, Yellen does not expect rates will have to rise by too much to reach neutral.

"Because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance," Yellen wrote in prepared testimony. "The Committee continues to anticipate that the longer-run neutral level of the federal funds rate is likely to remain below levels that prevailed in previous decades."

Also in her testimony, Yellen said that the central bank will likely begin unwinding its $4.5 trillion balance sheet this year, while closely monitoring low-inflation trends. Yellen said she anticipates the balance sheet will be "appreciably below" current levels as the Fed unloads its bond portfolio, though likely still higher than levels before the 2008 financial collapse.

In an answer to a question on whether the Fed should allow inflation to move closer to its 2% target before making additional hikes, Yellen pointed to "temporary factors [that] appear to be at work," including lower cell phone plan and prescription drug prices. Yellen also said it was "premature to reach the judgment" that the economy was not heading toward 2% inflation over the next couple of years, particularly as the strength of the labor market feeds through into upward pressure on wages and prices. Again, Yellen reiterated that monetary policy was not on a preset course and would be adjusted if it appears an undershoot in inflation proved "persistent."

No Fed monthly meeting this year has chances greater than 50% of seeing another rate hike from the central bank. The closest, the December meeting, has a 0.25% interest rate increase at a 47.3% likelihood, according to CME Group fed funds futures.

Inflation on Watch

U.S. inflation numbers continued to come in weak. The consumer price index was flat in June, disappointing analysts looking for a 0.1% increase. Core consumer prices, excluding food and energy, increased by 0.1% last month. Consumer prices over the past 12 months dipped to growth of 1.6%, down from 1.9%, while core inflation held at 1.7%.

Producer prices crept higher in June, while the longer-run 12-month core cooled. U.S. producer prices rose by 0.1% last month, while core prices excluding food and energy increased by 0.2%. Producer prices over the past 12 months grew 2%, down from 2.4% in May. Core 12-month core prices also increased 2%, 10 basis points lower than the month earlier.

Welcome to the Second-Quarter Reporting Period

The second-quarter earnings season got off to a start on Friday with results from several notable leaders in the banking sector.

J.P. Morgan Chase & Co. (JPM - Get Report) reported stronger-than-expected profit and revenue in the second quarter as lending activity increased. Profit rose to $1.82 a share, up from $1.55 a share a year earlier and above consensus of $1.59. Revenue of $26.41 billion exceeded forecasts of $24.96 billion.

Citigroup Inc. (C - Get Report) exceeded profit and revenue estimates over its recent quarter. Net income of $1.28 a share was 4 cents higher than a year earlier and topped estimates by 7 cents. Revenue of $17.9 billion came in higher than an estimate of $17.4 billion. Trading and fixed income revenue each declined by 6%, while equity trading increased 11%.

Wells Fargo & Co. (WFC - Get Report) reported a rise in net income during its second quarter. Profit rose 6% on a per-share basis, coming in at $1.07 a share. Analysts expected $1.01 a share. Revenue was unchanged at $22.2 billion, slightly weaker than estimates.

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Shares of JPMorgan, Wells Fargo, Bank of America Corp. (BAC - Get Report) , HSBC Holdings PLC (HSBC) , Goldman Sachs Group Inc. (GS - Get Report) and Citigroup were all lower. The Financial Select Sector SPDR ETF (XLF - Get Report) declined by 1.1%.

Overall, analysts anticipate another quarter of above-average strength. CFRA Research said it anticipates 6.2% year-over-year earnings growth among S&P 500 companies, better than a 1.7% earnings decline seen in the same quarter a year earlier. The energy sector is expected to lead the pack, recovering from weakness over the previous two years.

Healthcare Trouble

The Senate GOP released a revised repeal-and-replace bill draft on Thursday. The new draft includes an amendment from Sen. Ted Cruz which allows insurers to offer cheap, bare-bones insurance plans so long as they also offer Obamacare plans.

The latest revision to the healthcare bill has not garnered much support -- two Republicans (Sens. Susan Collins and Rand Paul) already have said they will not vote "yes" and there are a number of reportedly undecided Republicans.

Senate Majority Leader Mitch McConnell struggled to whip up votes for the initial iteration of the controversial healthcare bill after it was released to the public in late June. The Congressional Budget Office calculated that the previously released bill would leave 22 million more people uninsured by 2026.

The Senate will delay its August recess until the third week of the month, McConnell said on Tuesday, July 11. The delay allows the Senate extra time to come to a consensus on a healthcare bill and make progress on the debt ceiling and tax legislation.

Don Jr. in a Mess

Ties between the Russian government and the Trump campaign grew stronger this week. On Tuesday, Donald Trump Jr., the president's first-born son confirmed that he had met with a Russian attorney in a string of emails posted to Twitter. In emails, Trump's former Russian business partner told Trump Jr. that a meeting with a Russian attorney would include "very high level and sensitive information" that would "incriminate Hillary" Clinton. He also said this was "part of Russia and its government's support for Mr. Trump." Trump Jr.'s emails support a New York Times article posted near simultaneously.

Special counsel Robert Mueller is currently conducting an investigative probe into possible collusion between the Russian government and the Trump campaign. Several intelligence agencies have confirmed that Russia had interfered with the 2016 U.S. election by, among other things, posting misinformation against Democratic candidate Clinton.

"There's a real question about the political ability of the Trump administration to push through any of its policy priorities," Brad McMillan, chief investment officer for Commonwealth Financial Network, told TheStreet.

He continued, "We've already seen Congress not be as functional as had been hoped and the White House really, despite some challenges, has been more organized. Now the Trump Jr. news really calls that into question. If that really takes out the White House's ability to move the ball forward economically, that's a bad thing from a market perspective."