NEW YORK (AP) — U.S. stocks are breaking out of the doldrums Tuesday after Federal Reserve Chair Janet Yellen said the central bank still expects interest rates in the U.S. to rise gradually. Big names including Apple and Microsoft are leading tech stocks higher. The market is on track for its biggest gain in two weeks.
KEEPING SCORE: The Dow Jones industrial average rose 88 points, or 0.5 percent, to 17,623 as of 3 p.m. Eastern time. The Standard & Poor’s 500 index gained 16 points, or 0.8 percent, to 2,052. The Nasdaq composite index climbed 75 points, or 1.6 percent, to 4,841, as tech stocks rose. Small cap stocks did particularly well.
FED FOCUS: In remarks to the Economic Club of New York, Fed Chair Yellen said the Fed expects to move slowly because the U.S. economy and financial conditions have weakened over the last few months, and global pressures could harm the U.S. economy. Those concerns include a broad economic slump, lower oil prices, and the shaky stock market.
Higher interest rates slow down economic growth because they make lending and borrowing more expensive, and investors feared the Fed would hurt the economy by raising interest rates too much. But earlier this month the Fed said it would go slower in raising rates, and Yellen emphasized that course on Tuesday.
TURNAROUND: Stocks were trading slightly lower before Yellen’s remark, but they moved higher after the text of her remarks 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 1.82 percent from 1.89 percent. The euro rose to $1.1298 from $1.1200. The dollar slipped to 112.76 yen from 113.28 yen. Gold rose $15.70, or 1.3 percent, to $1,235.80 an ounce.
TECH STOCKS: Apple climbed $2.40, or 2.3 percent, to $107.59 after the FBI dropped its legal efforts to force Apple to break into the iPhone used by Syed Farook, who along with his wife killed 14 people in San Bernadino, California, in December. The FBI said it was able to hack into the phone, and 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.
Elsewhere, Microsoft added $1.16, or 2.2 percent, to $54.70. Information technology company SAIC advanced $5.82, or 12.5 percent, to $52.37 after its fourth-quarter profit was far larger than analysts expected.
ENERGY: Benchmark U.S. crude dropped $1.11, or 2.8 percent, to $38.28 a barrel in New York. Brent crude, used to price international oils, lost $1.13, or 2.8 percent, to $39.14 a barrel in London.
MEDIVATION INQUIRY: 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 shed $3.19, or 7.7 percent, to $38.06.
HOMEBUILDERS RALLY: Homebuilder Lennar is rising after it reported strong quarterly results, selling more homes at higher prices. Its stock gained $1.42, or 3 percent, to $48.12. Competitor D.R. Horton rose 95 cents, or 3.2 percent, to $30.77 and PulteGroup added 37 cents, or 2 percent, to $18.49.
BANKS BONKED: Financial stocks lagged the market. They are able to charge more money on lending when interest rates are higher, and they’ve been hurt this year as the Fed has emphasized that interest rates won’t go up very much. The weakening price of oil also hurt bank stocks. They have come under pressure because investors are worried that their loans to energy companies won’t be repaid.
Bank of America fell 29 cents, or 2.2 percent, to $13.33 and Wells Fargo lost 78 cents, or 1.6 percent, to $47.92.
FEELING GOOD: Consumers said they are feeling more confident, partly because the stock market has rebounded over the last month and a half. The Conference Board said its consumer confidence index rose. Their view of current economic conditions grew dimmer, but consumers reported feeling a bit better about the future.
CONN NOT: Retailer Conn’s skidded $3.73, or 23.8 percent, to $11.92 after its quarterly profit came up short of estimates and its 2016 forecasts disappointed investors.
OTHER COMMODITIES TRADING: Heating oil fell two cents to $1.16 a gallon. Natural gas rose 3 percent 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 percent, to $2.21 a pound.
OVERSEAS: France’s CAC 40 added 0.9 percent and Germany’s DAX picked up 0.4 percent. The FTSE 100 index of leading British shares was little changed. Japan’s benchmark Nikkei 225 lost 0.2 percent and South Korea’s Kospi added 0.6 percent. Hong Kong’s Hang Seng gained 0.1 percent.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP. His work can be found at http://bigstory.ap.org/journalist/marley-jay