Stocks rally on Yellen; best four days for S&P 500 in more than a year
U.S. stocks surged on Tuesday, with the Dow Jones Industrial Average rising triple digits and the Nasdaq Composite turning positive for the year, as Federal Reserve Chair Janet Yellen reassured Wall Street that the Fed would continue the central bank's policy of providing monetary stimulus to bolster the economy.
(Read more: Yellen speaks; The market loves it)
"The market does not want uncertainty, and she certainly didn't deliver any surprises," said Dorothy Weaver, co-founder of Collins Capital and former chairman of the Federal Reserve Bank in Miami.
"She hit the right notes; the theme of the day is continuity. If there were one area where she made news, it was her view that cyclical issues are still hanging over the economy, and additional Fed stimulus is likely," said Dan Greenhaus, chief global strategist at BTIG.
(Read more: Yellen just added pressure on emerging markets)
The market rally is "principally due to the fact that Janet Yellen did nothing to spook the market, directly or inadvertently. In fact, she did quite the opposite. I think the market is relieved by her commentary, that she's going to remain extremely accommodative," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
"A contributing factor is the fact that the Republicans are talking about a clean bill to raise the debt ceiling; the fiscal dysfunction has become a back story, so we're seeing the whole political circus beginning to fade," said Luschini, referring to the announcement Tuesday by House GOP leaders that they will this week advance an increase in the government's borrowing cap without any additional measures attached.
(Read more: GOP to present 'clean' debt limit bill: Boehner)
"She continues to give every signal that the Fed will continue to remain very accommodative; they understand there is more work to be done," said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.
In her prepared remarks before the House Financial Services Committee, Yellen stressed continuity in monetary policy and said the recovery in the labor market is far from finished.
Sprint shares jumped after the telecommunications company reported fourth-quarter revenue that beat expectations. CVS Caremark gained after the prescription drug provider tallied fourth-quarter profit above estimates.
Energy led gains among the 10 major sectors on the S&P 500, which rose 19.91 points, or 1.1 percent, to 1,819.75.
Turning positive for the year, the Nasdaq climbed 42.87 points, or 1 percent, to 4,191.04.
Tuesday's rally marked the best four-session stretch for both the S&P 500 and the Nasdaq in more than a year.
Advancers outdid decliners by a more-than 3-to-1 ratio, with almost 710 million shares traded. Composite volume neared 3.7 billion.
The dollar edged lower against the currencies of major U.S. trading partners and the yield on the benchmark 10-year Treasury note used in figuring mortgage rates and other consumer loans rose 6 basis points to 2.725 percent.
After on Monday closing above $100 a barrel for the first time since Dec. 27, crude-oil futures for March delivery on Tuesday fell 12 cents to $99.94 a barrel. Gold futures for April delivery gained $15.10, or 1.2 percent, to $1,289.80 an ounce.
On Monday, stocks finished with slight gains as many investors opted to remain on the sidelines ahead of Yellen's monetary policy report to lawmakers.
—By CNBC's Kate Gibson
Coming Up This Week:
Tuesday: Richmond Fed President Jeffrey Lacker speaks at 8 p.m. Eastern. Dallas Fed President Richard Fisher speaks at 8:10 p.m. Eastern.
Wednesday: Earnings: Deere, Dr. Pepper Snapple, MetLife, Whole Foods, Cheesecake Factory, Cisco, Thomson Reuters, Rogers Communications, CBS, Angie's List, Taubman Centers, Agnico Eagle Mines, Valspar, Owens Corning, SunPower, Hospira, Kinross Gold, Equifax. Mortgage applications at 7 a.m. Eastern, St. Louis Fed President James Bullard at 8:45 a.m. Eastern. Treasury auctions $24 billion in 10-year notes at 1 p.m.
Thursday: Earnings: Pepsico, AIG, Kraft Foods, Applied Materials, Discovery Communications, Molson Coors, Generac, Avon Products, Borg Warner, Calpine, Goodyear Tire, Goldcorp, Cabela's, Sonoco Products, Trulia, Cliffs Natural, Bankrate. Jobless claims at 8:30 a.m. Eastern, retail sales at 8:30 a.m. Eastern, business inventories at 10 a.m. Eastern. Janet Yellen testifies before the Senate Banking Committee at 10:30 a.m. Eastern. The Treasury auctions $16 billion in 30-year bonds at 1 p.m. Eastern.
Friday: Earnings: Campbell Soup, Petrobras, Brookfield Asset Management, Interpublic, Red Robin Gourmet Burgers, VF Corp, Scripps Networks TRW Automotive. Import prices at 8:30 a.m. Eastern. Industrial production at 9:15 a.m. Eastern. Consumer sentiment at 9:55 a.m. Eastern.
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