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US stocks drift higher as Yellen testifies before Congress

By ALEX VEIGA

Of the Associated Press

Major U.S. stock indexes veered higher in afternoon trading Tuesday, with the Dow Jones industrial average and Standard & Poor's 500 index on track to close at record highs. Investors were considering the implications of the latest update on interest rate policy and the economy from the Federal Reserve, as well as news on U.S. home prices, consumer confidence and corporate earnings.

KEEPING SCORE: The Dow Jones industrial average rose 90 points, or 0.5 percent, to 18,206 as of 1:52 p.m. Eastern. The Standard & Poor's 500 index added four points, or 0.2 percent, to 2,114. The Nasdaq composite added one point, or 0.03 percent, at 4,962.

FED FOCUS: In remarks to Congress, Federal Reserve Chair Janet Yellen said the central bank remains “patient” in deciding when to start raising interest rates. She noted that many Americans remain unemployed, wage growth remains sluggish and inflation is running below the Fed's target. That means a rate increase is unlikely for at least the next two meetings, she said. Yellen's testimony supports the view that a rate increase is not likely before June or even later this year. The Fed has kept its benchmark rate near zero since 2008.

THE QUOTE: Yellen's remarks on the potential timing of an interest rate hike were in line with what Wall Street was expecting, noted Brad Sorensen, director of market and sector analysis at the Schwab Center for Financial Research.

Sorensen said Yellen's remarks confirmed that policymakers “remain flexible and they can hike as conditions warrant. And the market seems comfortable with that at this point.”

MUCH IMPROVED: Home Depot rose after the home-improvement retailer reported fourth-quarter financial results and a full-year outlook that exceeded Wall Street's expectations. The company also said it has authorized an $18 billion buyback of its shares and boosted its quarterly dividend by 26 percent. The stock added $4.28, or 3.8 percent, to $116.56.

SOARING SOLAR: Shares in First Solar jumped 14.2 percent a day after the solar power company said it plans to combine some of its assets with SunPower into an investment vehicle that is intended to provide steady dividends. First Solar led all the gainers in the S&P 500, adding $7.04 to $56.69.

CUTS AND HIKES: Shares in JPMorgan Chase rose 2.6 percent on news the bank plans to save $1.4 billion in annual expenses through cost-cutting measures while charging large clients deposit fees. The stock added $1.56 to $60.92.

GOOD AND NOT SO GOOD: Macy's reported better-than-expected earnings for the fourth quarter, but the retailer issued a forecast that fell short of Wall Street's expectations. The stock dipped $2.24, or 3.5 percent, to $61.92.

BAD QUARTER: Rosetta Resources slumped 13.1 percent after the oil and gas company reported worse-than-expected fourth-quarter earnings and said it is deferring production growth. Its shares slid $2.87 to $19.

SECTOR MONITOR: Eight of the 10 sectors in the S&P 500 index rose, led by telecommunications stocks. Health care and technology stocks declined.

ECONOMIC BELLWETHERS: In addition to corporate news, investors also got a batch of new economic data Tuesday. A key gauge of U.S. home prices showed that prices rose 4.5 percent in December versus a year earlier. The small gain comes after price increases slowed for 12 straight months. Meanwhile, the Conference Board reported that its consumer confidence index dropped this month to 96.4 from a revised 103.8 in January. The February and January readings are the highest since before the recession started in December 2007.

EUROPEAN MARKETS: Britain's FTSE 100 edged up 0.5 percent to 6,949, a record high. France's CAC-40 rose 0.5 percent to 4,886 while Germany's DAX gained 0.7 percent to 11,205.

The Athens Stock Exchange General Index jumped 9.8 percent on news that the government submitted a list of reforms aimed at winning final approval for extended rescue loans from the country's creditors. European officials said the list could serve as a basis for discussion about more credit for the struggling country.

ENERGY: Benchmark U.S. crude oil rose 43 cents to $49.88 a barrel on the New York Mercantile Exchange. It fell $1.36 on Monday to $49.45.

BONDS: U.S. government bond prices rose. The yield on the 10-year Treasury note held fell to 1.98 percent from 2.06 percent late Monday.

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AP business writers David McHugh in Frankfurt, Germany, and Kelvin Chan, in Hong Kong contributed to this story.

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