New York - US stocks swung into positive territory on Tuesday after Federal Reserve Chair Janet Yellen said the central bank should proceed “cautiously” on raising interest rates.
In her first comments since the Fed held steady on rates earlier this month, Yellen said global risks remained, including uncertainty over China and low oil prices.
Yellen's cautious tone contrasted with recent comments from several policymakers, including the chiefs of the Philadelphia and Atlanta Federal Reserves, who had expressed support for a more aggressive approach to raising interest rates this year.
Fed funds futures implied that traders now see a 46 percent chance the Fed will raise rates by a quarter point at its July policy meeting, below the 51 percent chance seen on Monday, according to CME Group's FedWatch program.
Peter Cardillo, chief market economist at First Standard Financial in New York, said the market liked Yellen's “moderate” remarks. “She's basically throwing a little cold water on the said 'hawkishness' that the market was worried about last week.”
Economic and financial developments in countries around the world have led policymakers to project slower path of rate hikes than initially expected in December.
At 13:28 p.m. ET (1728 GMT), the Dow Jones industrial average was up 44.93 points, or 0.26 percent, at 17,580.32, the S&P 500 index was up 7.8 points, or 0.38 percent, at 2,044.85 and the Nasdaq Composite index was up 48.98 points, or 1.03 percent, at 4,815.76.
Stocks were little changed before Yellen spoke.
The U.S. Treasury market rallied, with yields hitting multi-week lows, while the dollar weakened after her comments.
Seven of the 10 major S&P sectors were higher, led by tech stocks. The S&P financial sector fell 0.6 percent.
Shares of banks, which stand to gain from higher interest rates, were the biggest drags on the S&P. Bank of America was down 2.5 percent, while Wells Fargo, JPMorgan and Citigroup declined about 1.5 percent.
A renewed slide in crude prices weighed on the energy sector , which was down 0.71 percent.
Advancing issues outnumbered decliners on the NYSE by 2,065 to 893. On the Nasdaq, 1,879 issues rose and 848 fell.
The S&P 500 index showed 30 new 52-week highs and one new low, while the Nasdaq recorded 46 new highs and 40 new lows.
Reuters