Stocks closed at their highest level of the year Tuesday as investors welcomed the latest signal from the Federal Reserve that the central bank will move slowly to raise interest rates. Big names including Apple and Microsoft led technology stocks higher as the market made its biggest gain in two weeks.
Stocks rose after Fed Chairwoman Janet Yellen confirmed that the Federal Reserve isn't in a hurry to raise interest rates. The Fed made similar points just two weeks ago, but since then, some members of the Fed's decision-making committee had said they thought it was time for rates to go higher. Yellen's remarks boosted all corners of the market, and the price of gold rose along with stocks. Bond prices also rose, and yields sank.
"A little bit of self-doubt started to enter the trading public's mind," said Sam Stovall, U.S. equity strategist for S&P Capital IQ. "She reassured investors."
The Dow Jones industrial average rose 97.72 points, or 0.6%, to 17,633.11. The Standard & Poor's 500 index climbed 17.96 points, or 0.9%, to 2,055.01 Aided by the gains in tech stocks and in small-cap stocks, the Nasdaq composite index jumped 79.84 points, or 1.7%, to 4,846.62.
Stocks had been trading slightly lower before Yellen's remarks, but they moved higher after the text of her comments was released. The price of gold climbed, while bond yields fell and the dollar weakened. The yield on the 10-year U.S. Treasury note slid to 1.80% from 1.89%. The euro rose to $1.1295 from $1.1200. The dollar slipped to 112.75 yen from 113.28 yen. Gold rose $15.70, or 1.3%, to $1,235.80 an ounce.
Apple climbed 2.4% to $107.70 after the FBI dropped its legal efforts to force the company to break into the iPhone used by Syed Rizwan Farook, who along with his wife killed 14 people in San Bernardino in December. The FBI said it was able to hack into the phone, and it asked a court to vacate an order forcing Apple to help. Apple had been fighting the government's efforts and said it will continue trying to make its products more secure.
Microsoft rose 2.2% to $54.71. Information technology company SAIC advanced 11.5% to $51.88 after it posted fourth-quarter profits that were far larger than analysts expected.
Utility and telecommunications stocks, which pay hefty dividends similar to bonds, also traded higher.
Financial stocks made only small gains and lagged behind the broader market. Those companies are able to charge more money on lending when interest rates are higher, so the Fed's low-rate policy has hurt the sector. The weakening price of oil has hurt financial firms too, as investors worry that loans to energy companies won't be repaid.
Bank of America fell 1.5% to $13.42. Wells Fargo slid 1.3% to $48.05.
Benchmark U.S. crude dropped $1.11, or 2.8%, to $38.28 a barrel in New York. Brent crude, used to price international oils, fell $1.13, or 2.8%, to $39.14 a barrel in London.
Home building companies rose after Lennar reported strong quarterly results, selling more homes at higher prices. Its stock jumped 3.2% to $48.18. Competitor D.R. Horton rose 3% to $30.72, and PulteGroup rose 2.2% to $18.51.
Drugmaker Medivation fell after a group of legislators took aim at the company over the price of its prostate cancer treatment Xtandi. They urged federal agencies to cut the price of Xtandi and asked for public hearings. Xtandi is Medivation's only approved drug, and its average list price is about $129,000 a year. Sales topped $1 billion last year. Medivation stock dropped 6.1% to $38.75.
Retailer Conn's plunged 24.5%, to $11.81 after its quarterly profit came up short of estimates and its 2016 forecasts disappointed investors.
In other commodities trading, heating oil fell 2 cents to $1.16 a gallon. Natural gas rose 3% to $1.90 per 1,000 cubic feet. Silver picked up 4 cents to $15.23 an ounce. Copper prices slumped 3 cents, or 1.4%, to $2.21 a pound.