Investing.com -- U.S. stocks ticked up on a volatile final session before the Memorial Day holiday, as Janet Yellen rattled Wall Street by offering strong indications that the Federal Reserve could raise interest rates in the coming months.
Building off hawkish comments from her colleagues on the Federal Open Market Committee over the last two weeks, Yellen said Friday afternoon that it could be appropriate for the Fed to implement an imminent rate hike if the economy and labor markets continue to show improvement. The FOMC has left its benchmark Federal Funds Rate at a targeted range between 0.25 and 0.50% in each of their three meetings in 2016, after halting a seven-year zero interest rate policy in December. Any rate hikes from the Fed this year are viewed as bearish for equities, as investors pile into safer investments such as government bonds in order to capitalize on higher yields.
"It’s appropriate for the Fed to gradually and cautiously increase our overnight interest rate over time,” Yellen said in a Question-And-Answer session with Harvard economics professor Gregory Mankiw.
The Dow Jones Industrial Average gained 44.93 or 0.25% to 17,873.22, while the NASDAQ Composite index added 31.74 or 0.65% to 4,933.51, rallying late in the session after briefly turning negative in response to Yellen's remarks. The S&P 500 Composite index, meanwhile, rose 8.96 or 0.43% to 2,099.06, as nine of 10 sectors closed in the green. Stocks in the Financials, Health Care and Consumer Services industries led, each gaining more than 0.5% on the session. Stocks in the Basic Materials sector lagged, closing fractionally lower on Friday.
With the sharp gains over the last five days, the Dow posted its strongest weekly performance over the last 10 weeks, while the NASDAQ and S&P 500 recorded their best week in more than two months. The major indices are on track for their third consecutive monthly gains.
The top performer on the Dow was VZ Holding AG (SIX:VZN), which gained 0.44 or 0.88% to 50.60. Verizon shares rose moderately on Friday after the leading wireless service provider agreed on terms of a deal, halting a six-week labor strike that involved 36,000 union workers. The agreement between Verizon and two prominent unions, the Communications Workers of America and the International Brotherhood of Electrical Workers, came after two weeks of negotiations brokered by the U.S. Department of Labor. Terms of the deal were not disclosed.
"This proves that when we stand together we can raise up working families, improve our communities and protect the American middle class," Chris Shelton, president of the CWA, said in a statement.
The worst performer was McDonald’s Corporation (NYSE:MCD), which lost 0.53 or 0.43% to 123.26. Shares in McDonalds, which have lingered near 52-week highs throughout the spring, are still up by more than 25% over the last year.
The biggest gainer on the NASDAQ was Ulta Salon Cosmetics & Fragrance (NASDAQ:ULTA), which soared 19.46 or 9.11% to 233.15 after the beauty retailer posted record sales growth and topped analysts' earnings forecasts last quarter. The Chicago-based company now expects full-year earnings to grow by more than 20% for Fiscal Year 2016. The worst performer was Check Point Software Technologies (NASDAQ:CHKP), which fell 2.21 or 2.58% to 83.60.
On the New York Stock Exchange, advancing issues outnumbered declining ones by a 2,019-1,000 margin.