Wall Street closes high after Fed chair remarks

NEW YORK

U.S. stocks closed at their highest levels of the year Tuesday after the Federal Reserve signaled a careful approach to interest rate hikes.

The Dow Jones jumped 97 points to 17,633 while the S&P 500 increased 17 points to close at 2,055 and the Nasdaq rose 79 points to end the day at 4,846.

Following Yellen's speech, oil prices also increased modestly.

After diving below $38 a barrel during the day, American benchmark West Texas Intermediate climbed to $38.5 per barrel, and traded around that level at the close of the trading day. International benchmark Brent crude dipped as low as $39.47 but rose to $40.10 a barrel after Yellen's remarks – closing out in the same territory.

Yellen said the Fed should move "cautiously" to adjust its policy for interest rate hikes. If economic conditions improve more than expectations, the Fed could raise interest rates but if conditions falter or inflation remains low, the rate could be cut back to zero, she said.

The stock market will focus on weekly crude oil inventories that will be announced Wednesday by the U.S. Energy Information Administration.

After inventories rose three times more than expected last week, oil prices and the stock market recorded losses.