"The balance of research suggests that the core reforms we have put in place have substantially boosted resilience without unduly limiting credit availability or economic growth", Yellen said.
USA stocks rose on Friday (Aug 25), with petroleum-linked shares lifted by energy outages related to Hurricane Harvey as Federal Reserve Chair Janet Yellen steered clear of monetary policy during her much anticipated address.
The focus of Yellen's speech was on reforms and financial stability since the banking crisis and made no reference to U.S. monetary policy, but did indicate that any future changes should remain modest.
The Dow Jones Industrial Average fell 28.69 points, or 0.13 percent, to 21,783.4, the S&P 500 lost 5.07 points, or 0.21 percent, to 2,438.97 and the Nasdaq Composite dropped 7.08 points, or 0.11 percent, to 6,271.33.
But the possibility of a surprise from Federal Reserve chair Janet Yellen or European Central Bank chief Mario Draghi kept investors on edge.
In other news from the USA, home prices have been rising quickly.
Looking at reactions in forex markets, the dollar was trading at 109.36 yen, the euro/dollar pair rose to 1.1855 and sterling reached $1.2854 in early exchanges during the United States session. The US dollar index, which tracks the greenback against a basket of six major rivals, was down 0.40% at 92.86 by 10:23AM ET (14:23GMT), compared to 93.22 ahead of the speech.
Rates futures implied traders saw a 37.2 percent chance of a rate hike at the Fed's December meeting, down from nearly 39 percent on Thursday, CME Group's FedWatch tool showed.
On the USA economic front, the Commerce Department released a report showing a sharp pullback in durable goods orders in the month of July.
U.S. crude oil production hit 9.53 million barrels per day (bpd) last week, its highest since July 2015 and up more than 13 percent from its most recent low in mid-2016. Economists had expected durable goods orders to slump by 6.0 percent.
Both crude contracts rose more than 1 percent on Wednesday, buoyed by potential output disruptions from the Gulf of Mexico storm Tropical Depression Harvey.
Expectations for Mr Draghi's speech were high in financial circles after the precedent set by the his previous appearance at the mountain resort in 2014.
Reports on consumer confidence, personal income and spending, pending home sales, and manufacturing activity may also attract attention.
The stability of the current system guards against a repeat, she said, while outside analysts have noted that it could also free central bankers to leave interest rates lower instead of worrying about the impact of those low rates on financial markets. The euro slipped to $1.1789 from $1.1810.