By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market edged higher on
Tuesday as Federal Reserve Chairwoman Janet Yellen struck a dovish
tone in her prepared remarks to lawmakers.
Yellen said markets should expect the central bank to continue
to follow the low-interest-rate path laid out by her predecessor,
Ben Bernanke.
The S&P 500 index (SPX) added 7.7 points, or 0.4%, to
1,807.57, rising for the fourth straight session. The Dow Jones
Industrial Average (DJI) was up 83.74 points, or 0.5%, at
15,884.57.
The Nasdaq Composite (RIXF) rose 20 points, or 0.5%, to 4,168.35
and is close to erasing losses year-to-date. Follow our stock
market live blog.
Stocks have risen for the past three sessions after testing key
technical levels, prompting analysts to call an end to the
correction.
"The fact that Yellen will continue with tapering gives
investors confidence that the weather issues are transitory and
problems in the emerging markets are not big enough to drag the US
toward a recession," said Phil Orlando, chief equity market
strategist at Federated Investors.
"After the selloff in the markets which began in mid-January and
until early February, Treasuries and Vix were overbought and
equities were oversold. Once the emerging markets fears subsided
and collective economic data were generally strong, money began to
flow into the stocks and markets bounced off," Orlando said.
"We believe the near 6% drop in the S&P 500 and 8% drop in
the Russell 2000 were healthy and are now over. However, we may see
more such pullbacks during the year," he added.
Yellen said the Fed will continue to follow its
low-interest-rate policy course in remarks delivered before the
House Financial Services Committee. "Let me emphasize that I expect
a great deal of continuity in the Federal Open Market Committee's
approach to monetary policy," she said.
Follow live blog of Janet Yellen's testimony before
Congress.
On Thursday, she will testify before the Senate Banking
Committee. Read: Markets alert for any new policy signal from
Yellen
There were several other economic reports released on Tuesday. A
gauge of optimism among small businesses ticked up in January, led
by sales expectations and hiring plans. U.S. wholesale inventories
and wholesale sales in December also ticked up. Job openings at
U.S. workplaces ticked down to 3.99 million in December from 4.03
million in November.
In corporate news, Sprint shares (S) rose 6.9% after the company
reported a narrower loss for the fourth quarter.
CVS Caremark Corp. (CVS) shares rose 3% after the drugstore
chain posted a rise in profit and adjusted earnings beat estimates.
Chief Executive Larry Merlo calling the results "somewhat atypical"
as they were boosted by Medicare and the timing of generics.
Rackspace Hosting Inc. (RAX) slid 13% after posting a 30% drop
in profit late Monday, as higher costs more than offset growth in
revenue. It also said Chief Executive Lanham Napier would
retire.
Shares in DSW Inc. (DSW) rallied 3.2% on Tuesday after the
company narrowed its full-year adjusted earnings guidance as
fourth-quarter same-store sales came in flat. It also announced
Chief Financial Officer Douglas Probst will retire May 1.
WPX Energy (WPX) late Monday said its fourth-quarter and
full-year earnings will be impacted by up to $1.4 billion in pretax
charge stemming from a drop in forward market natural gas prices.
WPX shares slumped 9.8%, the biggest loser in the S&P 500.
ConAgra Foods Inc. (CAG) shares fell 6.6% after the food company
said Tuesday it cut its view for fiscal year 2014.
In other markets, European stocks climbed, while shares in Hong
Kong rallied and Tokyo was shut for a holiday. Gold pushed a win
streak toward a fifth session, while oil rose and the dollar pulled
back.
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