US stocks rose toward records, Treasuries rallied and the dollar retreated after Janet Yellen signaled the Federal Reserve won’t rush to tighten monetary policy as inflation remains persistently below target.

The Dow Jones Industrial Average jumped more than 120 points to a fresh all-time high, small caps rallied more than 1% and emerging-market equities surged as Yellen expressed confidence in the American economy while suggesting inflation rates won’t force the Fed’s hand. The dollar fell versus most major peers, while 10-year Treasury yields slid below 2.32% and gold futures rose. Oil bounced above $45 a barrel on reports of a decline in stockpiles.

The statement from Yellen diverted attention from the release of emails by Donald Trump Jr. about his controversial meeting with a Russian lawyer, though concern remains that the latest saga in Washington may be an unwelcome distraction for the Fed seeking to dismantle a decade of monetary stimulus. The scandal could delay fiscal stimulus initiatives in the US, keeping companies hesitant to deploy spending plans, commentators at Pacific Investment Management Co. to UBS Group AG warn.

“At the margin this does muddy the waters," Bhanu Baweja a cross-asset strategist at UBS, said in an interview with Bloomberg TV. “There is greater political uncertainty. All of a sudden that capex rebound that all of us have been waiting for such a long time, might get postponed even further. It matters for the economy and therefore it matters for what the Fed is thinking medium term."

The tightening cycle by many of the developed world’s central banks is expected to gain further momentum Wednesday from the Bank of Canada, which is expected to hike interest rates.