Stocks Jump on Fed’s Reassurance

S&P 500 and Dow Jones up more than one percent on Yellen's first day

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2014. (J.M. Eddin / MCT via Getty Images

Stocks rose sharply on Tuesday as investors seemed relieved by the Federal Reserve’s signal that the economy is strong enough for the central bank to continue scaling back its economy-stimulating asset-purchasing program.

The Dow Jones Industrial Average was up 210 points, or 1.2 percent at closing. The S&P 500 was up 20 points, 1.1 percent, and the Nasdaq was up 43 points, or 1 percent. More than two-thirds of companies on the S&P 500 that have reported earnings so far have beaten profit expectations, according to Reuters data, above the long-term average of 63 percent.

In her first public comments as Fed chair on Tuesday morning, Janet Yellen underscored the central bank’s continuation of its strategy to slowly cut asset purchases by $10 billion per month, supporting the approach of her predecessor, Ben Bernanke. Wall Street seemed to take to heart the Fed’s assurance that the economic outlook is sturdy enough to allow it continue paring down the market-supporting bond purchasing program.