Wall Street learned on Thursday it doesn't know more than Federal Reserve Chair Janet Yellen, said Wells Fargo chief equity strategist John Manley.
"She's aware of the inflation risks, she's aware of the deflation risk, she's aware of the asset bubble risk," Manley told CNBC's "Closing Bell." "She's aware of all these things, and she's going to proceed cautiously."
The stock market was ready for another day of Yellen's testimony on Capitol Hill. On Wednesday, Yellen said the Fed would start to unravel its balance sheet later this year. She said the process would be gradual, and so would rate hikes.
"We started out with a bounce in the morning hoping that Yellen would bring another box of candy to the game," Art Cashin, managing director at UBS Financial Services, said on "Closing Bell." "When she failed to do that, the market pulled back."
Oil led a midday rally that was later bolstered by the Senate's debut of a new health-care bill, Cashin said. Wall Street was less concerned about the outcome of that particular bill and more concerned about what that meant for tax reform, he said.
"Finding a health-care bill that was not dead on arrival gave them the feeling not so much about health care but that maybe tax reform might have some life if these guys can get close to agreeing on health care," Cashin said.
Wall Street's optimism may be short-lived, however, as two key senators voiced their opposition to the bill Thursday.