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Stocks Surge, Dow Adds 160 Points on Yellen's Economy Comments

Stocks surged after U.S. industrial production rose more than projected and Fed chief Yellen repeated her pledge to hold down interest rates.
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Stocks surged on Wednesday, with major indices adding 1 percent or more after U.S. industrial production rose more than projected and Federal Reserve chief Janet Yellen repeated her pledge to hold down interest rates while the economy is still recovering from the recession.

The Dow Jones Industrial Average closed unofficially 162 points higher, the S&P 500 added 19 points and the Nasdaq rose 52 points, or 1.29 percent.

Stocks held most of their gains as Yellen addressed the Economic Club of New York and after the release of the Fed's Beige Book, which found the U.S. economy bounced back from weather-related declines in recent weeks, with modest or moderate economic activity in eight of the Fed's 12 districts.

"The economy is still moving forward. What is happening in the marketplace is outside the scope of the Beige Book; what you're seeing in the marketplace is a question of valuation," said Frank Fantozzi, CEO of Planned Financial Services in Cleveland, Ohio.

In her speech, Yellen reiterated her intention to support the recovery even as the labor market improves, with the 6.7 percent unemployment rate in March still a percentage point higher than the central bank's projection of full employment.

"I hope it's completely clear that while monetary policy is very accommodating at this point, and I focused on the need to keep it so or to adjust it to make sure the recovery remains on track," she said. "As the recovery proceeds and healing occurs, it's obvious that we will need to tighten monetary policy to avoid overshooting our target."

Economic data had U.S. manufacturing output rising for a second straight month in March, with factory production up 0.5 percent last month and overall industrial production climbing 0.7 percent, beating expectations.

Another report from the Commerce Department said the pace of U.S. home construction bounced back less than expected last month, with the data coming after a report Tuesday that showed home builder confidence rising less than projected in April.