YELLEN TAKES DEAD AIM AT SOCIAL MEDIA COMPANY VALUATIONS

Janet Yellen is warning that social media companies' share prices, and those of other high-flying stocks, are dangerously high.

In her just-released full report to Congress on the state of monetary policy, the Fed Chair says, "...Valuation metrics in some sectors do appear substantially stretched-particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year."

She actually mentions this twice, explaining that "signs of risk-taking have increased in some asset classes" like social media and biotech firms, "with ratios of prices to forward earnings remaining high relative to historical norms."

Shares in Facebook are now down 1.3%, and off 0.6% in Twitter. NASDAQ's biotech ETF is off 1.5%.

Yellen is appearing before House members Tuesday morning.

Despite her warnings on these momentum stocks, Yellen says the broader stock market is not overvalued. "Some broad equity price indexes have increased to all-time highs in nominal terms since the end of 2013. However, valuation measures for the overall market in early July were generally at levels not far above their historical averages, suggesting that, in aggregate, investors are not excessively optimistic regarding equities."

More to come...