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US stocks soar on Fed, US debt ceiling progress

US stocks on Tuesday jumped more than one per cent after new US Federal Reserve chair Janet Yellen confirmed she would continue existing Fed monetary policy.

NEW YORK: US stocks on Tuesday jumped more than one per cent after new US Federal Reserve chair Janet Yellen confirmed she would continue existing Fed monetary policy.

The Dow Jones Industrial Average leaped 192.98 points (1.22 per cent) to 15,994.77.

The broad-based S&P 500 surged 19.91 points (1.11 per cent) to 1,819.75, while the tech-rich Nasdaq Composite Index added 42.87 points (1.03 per cent) at 4,191.05.

The equities rally marked the fourth day in a row of gains.

Appearing in her first congressional hearing since taking the top post at the US central bank on February 1, Yellen said she expects to continue predecessor Ben Bernanke's plan to scale back stimulus and keep interest rates low until the labour market improves significantly.

The House of Representatives Republicans also signalled they would agree to extend the US borrowing authority without attaching controversial conditions. The announcement by House Speaker John Boehner averts a major showdown with President Barack Obama over raising the debt limit that could have rattled markets.

"The fact that Fed Chair Yellen didn't rock the hawkish boat with her testimony today and that the GOP-led House has agreed to bring a clean debt limit bill to a vote on Wednesday has bolstered the turnaround sentiment," Briefing.com analysts said in a market note.

Dan Greenhaus, chief global strategist at BTIG, attributed the market's rally since last Wednesday to solid earnings and recognition that financial headwinds in emerging economies are "somewhat country-specific" and not an instance of contagion.

CVS Caremark rose 2.7 per cent as earnings of $1.12 per share bested expectations by a penny on a four per cent gain in retail pharmacy same-store sales.

Telecom company Sprint reported its highest-ever level of subscribers with 53.9 million after adding 682,000 in the fourth quarter. Those gains helped the stock rise 2.7 per cent despite an operating loss of $576 million.

ConAgra Foods slashed its full-year profit forecast to $2.22-$2.25 per share from $2.34-2.38, citing customer-service problems following a reorganization, among other issues. Shares sank 6.3 per cent.

News that Groupon senior vice president Jeffrey Holden was leaving the online coupon distributor pushed shares 6.1 per cent lower.

A surprise departure at open-cloud company Rackspace Hosting also rattled investors. An announcement that chief executive Lanham Rapier had retired shaved 19.1 per cent from the stock.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.72 per cent from 2.68 per cent, while the 30-year increased to 3.68 per cent from 3.66 per cent.

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