The job market in some ways is tougher now than in any recession, Yellen said at a speech in Chicago. She added the Fed's "extraordinary commitment," in the form of massive bond-buying and ultra-low interest rates, is "still needed, and will be for some time."
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Investors will also be closely monitoring for comments on interest rates. During Yellen's first news conference following the FOMC rate decision on Mar. 19, equities were hard hit after the new Fed Chair raised the possibility of an earlier-than-anticipated increase in rates.
"Even before she became the new Fed Chair, Yellen was one of the largest doves on the FOMC," noted Keith Bliss, senior vice president at Cuttone & Co. "She's not necessarily walking back on her previous remarks [regarding rate increase], but she's dampening the enthusiasm that the comment gave—she's emphasizing that decisions are data dependent."
Bond prices dropped across the board on the speech. The yield on the 10-year Treasury note was up three basis points, or 0.03 percentage point, to 2.75 percent just after Yellen's comments.
Wall Street was also optimistic amid hopes of stimulus in both the euro zone and China.
Chinese state media reported that the Beijing was preparing measures to bolster the economy. However, gains to Chinese shares were pared by caution ahead of the publication of official manufacturing data on Tuesday. Still, Asian shares ended Monday's session mostly higher.
Meanwhile, European shares were lifted amid hopes the European Central Bank will announce stimulus measures when it meets later this week.
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Lululemon bounced after Wedbush upgraded the stock to "outperform" from "neutral," saying bad news is already priced into the yoga apparel maker's stock and that it foresees a rebound in investor sentiment.
Tesla edged higher after the electric car maker reached an agreement with New York State on how it may sell cars. Tesla will be allowed to keep its five currently licensed retail locations, but additional locations will need to follow state dealer franchise laws.
In a released testimony, General Motors CEO Mary Barra apologized for the automaker's ignition issue and admited she doesn't know why GM took so long to catch the ignition issue. Barra is scheduled to testify before Congress Tuesday. On Friday, GM expanded its recall to 2.6 million vehicles, adding 917,000 more units.
Walt Disney gained after the media conglomerate said "Frozen" became the top-grossing animated film in box office history, topping $1 billion in global sales.
Biogen Idec climbed after the biotechnology company won U.S. approval for its long-acting hemophilia B treatment Alprolix, according to the FDA.
Meanwhile, other biotech and pharmaceutical companies including Amgen, Vertex Pharma and Gilead were higher, reversing a recent sharp slide in the sector. The Nasdaq Biotechnology index plunged 7 percent last week, its fifth consecutive week of declines.
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