1st LD Writethru: U.S. stocks rally after Fed Chair Yellen's dovish remarks

U.S. stocks posted solid gains Tuesday, as investors digested the dovish comments from U.S. Federal Reserve Chair Janet Yellen.

The Dow Jones Industrial Average added 97.72 points, or 0.56 percent, to 17,633.11. The S&P 500 gained 17.96 points, or 0.88 percent, to 2,055.01. The Nasdaq Composite Index jumped 79.84 points, or 1.67 percent, to 4,846.62.

Speaking at the Economic Club of New York, Yellen reiterated Tuesday that only gradual increases in the federal funds rate are likely to be warranted in coming years, and global developments have increased the risks associated with the Fed's economic outlook.

Although the baseline outlook has changed little on balance since December, global developments pose ongoing risks. These risks appear to have contributed to the financial market volatility witnessed both last summer and in recent months, said Yellen.

"Given the risks to the outlook, I consider it appropriate for the FOMC to proceed cautiously in adjusting policy," she said. Federal Open Market Committee (FOMC) is the policy-making panel of the Fed, the U.S. central bank.

"Based on Yellen's description of the FOMC's neutral rate forecast, coupled with the actual rate of recovery in the neutral rate to date, the Fed is likely to raise rates just once this year (not the two hikes they expect) and no more than twice next year," said Chris Low, chief economist at FTN Financial.

On the economic front, the Conference Board Consumer Confidence Index came in at 96.2 in March, up from 94.0 in February. Endit