NEW YORK (AP) — Reassuring words from the new head of the Federal Reserve sent stocks soaring on Tuesday and gave the market its longest winning streak this year.
The Dow Jones industrial average jumped nearly 200 points after Fed Chair Janet Yellen said she would continue the central bank's market-friendly, low-interest rate policies.
Investors also welcomed news that Congress appeared poised to raise the U.S. borrowing limit without the political drama that happened late last year. That would avert the threat of a disastrous default on the U.S. government's debt.
"Many of the risks everyone had their eyes on for 2014 are quickly being cleared away," said Kristina Hooper, head of U.S. investment strategies for Allianz Global Investors.
On Tuesday, the Dow Jones industrial average rose 192.98 points, or 1.2 percent, to 15,994.77. It was the Dow's third triple-digit advance in four days.
The Standard & Poor's 500 index rose 19.91 points, or 1.1 percent, to 1,819.75 and the Nasdaq composite rose 42.87 points, or 1 percent, to 4,191.04. The Nasdaq is now in positive territory for 2014, while the S&P 500 and Dow are down 1.5 percent and 3.5 percent the year, respectively.
The Dow and the S&P have risen four straight days, their longest stretch of gains this year.
It's a positive shift for the stock market, which had its worst January since 2010 as concerns about growth in China and the U.S. sent investors shifting from stocks to bonds. The first month was so rough, with frequent triple-digit swoons in the Dow, that it raised worries of a "correction," a decline of 10 percent or more from a peak. That kind of slump hasn't hit the stock market in more than two years.
But this week, investors had two worries resolved, analysts say.
Yellen, in her first public comments since taking over for Ben Bernanke at the Fed last week, told Congress that she expects a "great deal of continuity" with her predecessor.
Yellen said she supports Bernanke's view that the economy is strengthening enough to withstand a pullback in the Fed's stimulus, but that interest rates should stay low to encourage more growth. Last week, the Fed announced it would reduce its bond purchases by $10 billion to $65 billion a month.