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Close Update: Stocks Set Record Highs as Banking Shares Rally on Yellen's Testimony

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The major averages set record highs for a fourth consecutive day, driven higher by the banking sector after Fed Chair Janet Yellen raised the possibility of a March rate hike during her semi-annual testimony to the Senate Banking Committee.

Yellen cautioned that waiting too long to remove accommodation would be "unwise", and expects the "evolution of the economy" to warrant further, albeit gradual, rate hikes. Although stocks wobbled on her early statements, the banking sector raced higher on the anticipation for higher interest rates, driving up the share price of Dow component stocks Goldman Sachs ( GS ) and JP Morgan ( JPM ) to record highs.

Before Tuesday's open, stocks were straddling the flat line, weighed down by the resignation of President Donald Trump's national security adviser, and a muted year-over-year gain in a key inflation measure. January producer prices surged 0.6% and the core rose 0.4%, both well above expectations. But the stronger dollar coupled with downward revision to December kept the year-over-year PPI at only 1.6%.

Related markets reflected the interest rate outlook with Treasury yields higher across the curve, the dollar firmer against the majors, and gold slightly higher. Oil futures were held onto modest gains, but off their session highs.

Wednesday brings a deluge of economic data that will have a significant impact on Fed policy, including the January CPI, retail sales, industrial production and capacity utilization, the Empire State manufacturing index, business inventories and the housing market index.

More importantly though, Yellen will have the opportunity to clarify today's remarks with the second part of her Congressional testimony to the House Financial Services Committee.

Here's where the markets stood at the close:

US MARKETS

Dow Jones Industrial Index was up 92.25 points (+0.45%)

S&P 500 was up 9.33 points (+0.40%)

Nasdaq Composite Index was up 18.62 points (+0.32%)

GLOBAL SENTIMENT

FTSE 100 was down 0.14%

Nikkei 225 was down 1.13%

Hang Seng Index was down 0.03%

Shanghai China Composite Index was up 0.03%

UPSIDE MOVERS

(+) ZAIS (+110.73%) Christian Zugel acquires 7.5% stake

(+) CYNO (+28.01%) To be acquired by Hologic ( HOLX ) for $66 per share

(+) NMM (+15.25%) Beats Q4 EPS estimate by eight cents, misses revenue expectations

(+) GIG (+12.55%) To be acquired by Integrated Device Technologies ( IDTI ) for $250 million

DOWNSIDE MOVERS

(-) AVIR (-35.43%) Reports top-line results from phase 2b Spiritus trial of Vapendavir, but did not show statistically significant reduction in asthma control

(-) GEVO (-31.76%) Announces $11.9 million from share and warrant offering

(-) HIBB (-11.73%) Issued weak FY18 guidance and expects Q4 results to be below expectations

(-) AMKR (-7.95%) Missed sales expectations, issued weak guidance for Q1

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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