Investing.com -- U.S. stocks rose sharply on Tuesday, after Janet Yellen provided a boost to the major indices with a dovish outlook for future interest rate hikes by suggesting the Federal Reserve should proceed cautiously in normalizing its current monetary policy cycle.
Citing increased risks with global financial and economic conditions, along with widespread volatility in oil prices, Yellen reiterated on Tuesday that the U.S. central bank should exercise extreme caution with the timing of its next rate hike. Yellen's comments contradict a wave of hawkish remarks from several of her colleagues last week, who argued that the Fed should implement multiple rate hikes before the end of the year amid rising inflation and sharp declines in the dollar. Any increases in the Fed's benchmark Federal Funds Rate this year are viewed as bearish for U.S. equities, as investors pile into U.S. Treasuries and other low-risk bonds in an effort to capitalize on higher yields.
The Dow Jones Industrial Average rose 98.14 or 0.56% to 17,633.53, while the NASDAQ Composite index surged 79.83 or 1.67% to 4,846.62, amid strong performances among tech and media stocks. The S&P 500 Composite index, meanwhile, added 17.96 or 0.88% to 2,055.01, as all 10 sectors closed in the green. Stocks in the Technology, Utilities and Telecommunications industries led, each gaining more than 1.2% on the session.
Both the Dow and S&P 500 closed at their highest levels of the year.
The top performer on the Dow was Apple Inc (NASDAQ:AAPL), which gained 2.53 or 2.41% to 107.72 in Tuesday's session. On Monday evening, the U.S. Department of Justice withdrew a criminal complaint against the tech giant in a controversial case centered around the phone of the suspect of last December's terrorist attack in San Bernardino. In a terse court filing, the Justice Department said it "no longer requires Apple (NASDAQ:AAPL)'s assistance," after determining a method to unlock the phone of Syed Farook, the alleged suspect in the shooting. The worst performer was 3M Company (NYSE:MMM), which fell 1.81 or 1.09% to 164.47. Shares in the multinational conglomerate are relatively flat this year.
The biggest gainer on the NASDAQ was TripAdvisor Inc (NASDAQ:TRIP), which added 2.98 or 4.77% to 65.49 after analysts at Vetr, Inc. upgraded the online travel website to a strong buy on Tuesday. The worst performer was Whole Foods Market Inc (NASDAQ:WFM), which fell 0.32 or 0.98% to 31.78. Whole Foods finished just below Biomarin Pharmaceutical Inc (NASDAQ:BMRN), which lost 0.46 or 0.58% to 78.54, amid a crowded trade in Tuesday's session after receiving an overweight rating from analysts at Piper Jaffray.
The top performer on the S&P 500 was Southwestern Energy Company (NYSE:SWN), which added 0.49 or 6.53% to 7.99, despite a fifth consecutive losing session from U.S. crude futures. Nevertheless, Southwestern Energy shares are still down by more than 65% over the last year. The worst performer was Diamond Offshore Drilling Inc (NYSE:DO), which tumbled 1.14 or 5.04% to 21.46. Shares among top oil drillers were among the session's worst performers, as Transocean Ltd (NYSE:RIG) and Ensco PLC (NYSE:ESV) also fell by more than 3% on the session.
On the New York Stock Exchange, advancing issues outnumbered declining ones by a 2,464-628 margin.