Stocks End Week Higher After Fed Chair Yellen Strikes Dovish Tone

Stocks ended the week higher after Federal Reserve Chair Janet Yellen emphasized that rate hikes by the central bank will be gradual, spurring the market-implied odds of a rate hike at the April FOMC meeting to drop to zero.

MACRO NEWS: Speaking at the Economic Club of New York on Tuesday, Federal Reserve Chair Janet Yellen said she considers it appropriate for the Fed to "proceed cautiously" in adjusting policy, adding that although the markets have largely rebounded after dipping earlier in 2016, "in other respects economic and financial conditions remain less favorable than they did back at the time of the December FOMC meeting."

The Fed chair also expressed the view that the U.S. impact from global market developments since the start of the year will "most likely be limited"...

In the U.S., nonfarm payrolls increased 215,000 in March, topping the expected 205,000 increase. The unemployment rate rose to 5.0%, versus expectations for it to remain at 4.9%. Average hourly earnings grew 0.3% month-over-month and 2.3% year-over-year, versus expectations for them to be up 0.2% and 2.2%, respectively.

Markit's manufacturing PMI ticked up to 51.5 in March, matching the consensus forecast. ISM's manufacturing index rose to 51.8 in March, which was better than the 51.0 reading that was expected. The University of Michigan consumer sentiment survey came in at 91.0 in the final March reading, above the 90.5 consensus forecast. Personal income rose 0.2% in February, versus expectations for an increase of 0.1%, while spending rose 0.1%, as expected.

The core PCE price index increased 0.1%, versus expectations for it to be up 0.2%. The U.S. goods trade deficit widened to $62.9B in February, which was a little larger than the $62.5B forecast. The Conference Board's consumer confidence reading rose 2.2 points to 96.2 in March, which was better than the expected 94.0 reading. The Dallas Fed manufacturing survey improved to -13.6 in March, which was better than the -25.8 reading that was expected. The Chicago PMI bounced 6 points to 53.6 in March, nearly erasing the 8 point drop to 47.6 in February...

In Asia, the state-run China Daily reported that China's massive pension fund, which can only invest in treasuries and bank deposits as of now, is likely to start investing in the mainland's A-share markets this year. Meanwhile, Japanese Prime Minister Shinzo Abe said he will proceed with the scheduled tax hike next year, unless there is a natural disaster or economic calamity on the scale of the Lehman bankruptcy. Abe also suggested he was open to further economic stimulus.

Japan's industrial production dropped 6.2% in February after rising in January, versus economists' forecast for a 5.9% drop. The Bank of Japan's Tankan business sentiment survey showed business confidence fell to its lowest in three years. Japan's manufacturing PMI came in at 49.1, inline with February's reading. China's official manufacturing PMI came in at 50.2, versus the consensus expectation for a reading of 49.4, while its non-manufacturing PMI rose to 53.8 from 52.7 in February. The unofficial China Caixin manufacturing PMI was also better than expected at 49.7...

In Europe, the European Commission reported that an index of executive and consumer confidence declined to 103.0 in March from a revised 103.9 the previous month. The reading, which is the weakest since February 2015, was below economists' expectation for a reading of 103.8. The overall Eurozone PMI reading came in at 51.6, versus the consensus call for a reading of 51.4.

COMPANY NEWS: MetLife (MET) jumped 5% on Wednesday after the insurer won a court ruling requesting that its designation as a systemically important financial institution be rescinded. Shares of peers Prudential (PRU) and AIG (AIG), who have also been designated as SIFIs, moved higher that day as well. The next day, GE (GE) filed a request with the Financial Stability Oversight Council to rescind GE Capital's designation as a systemically important financial institution. GE Capital has recently completed a number of divestitures in order to size down and potentially shed its SIFI label, with the company arguing that the business "has substantially reduced its risk profile and is significantly less interconnected to the financial system, and therefore does not pose any conceivable threat to U.S. financial stability"...

Shares of Tesla (TSLA) advanced over 3% on Friday after the company unveiled its "mass-market" Model 3 electric car. As part of the event, CEO Elon Musk confirmed the Model 3 will sell for $35,000 before incentives and said the company had already received 115,000 pre-orders for the vehicle as of Thursday night. In a tweet Friday afternoon, Musk updated that pre-order number to nearly 200,000...

Starwood Hotels (HOT) announced that the consortium led by China's Anbang Insurance has withdrawn its acquisition proposal. The Chinese company is said to have cited "market considerations," though a report from Financial Times made it appear that Chinese regulators may have played a large role in Anbang's decision to walk away. Starwood's board continues to unanimously support the existing merger agreement with Marriott (MAR) and both companies will host their respective shareholder meetings on that deal April 8.

In other M&A news, Cleco (CNL) advanced 13% on Tuesday after the Louisiana Public Service Commission voted to approve its takeover by a group led by Macquarie Infrastructure and Real Assets...

U.S. prosecutors indicated that the government has now successfully accessed the data stored on San Bernardino attacker Syed Farook's iPhone, meaning they no longer need Apple's (AAPL) assistance in cracking the device. Accordingly, the government has asked a magistrate judge in California to vacate her order compelling Apple to assist the FBI in that case, though the government has made many other similar requests of both Apple and Alphabet's (GOOG) Google unit in cases throughout the U.S...

Boeing (BA) dropped nearly 2% on Wednesday after The Wall Street Journal reported, citing a company spokesman, that the commercial airplane and defense giant plans to cut over 4,500 jobs by June...

Several companies made headlines after making changes at the top, as Pandora (P) tumbled about 12% on Monday after announcing that CEO Brian McAndrews will be replaced by returning founder Tim Westergren, while Revlon (REV) dropped nearly 4% the same day after its board selected Colgate-Palmolive (CL) veteran Fabian Garcia as the company's new president and CEO. Separately, Avon Products (AVP) advanced 8.5% on Monday after naming former FedEx (FDX) executive Cathy Ross to its board and reaching an agreement with activist investors Barington Capital and NuOrion Partners, avoiding a potential proxy fight by allowing the groups to approve a new independent director that will be jointly selected by Avon and major shareholder Cerberus Capital...

SunEdison (SUNE) plunged 56% on Tuesday after one of its "yieldcos," TerraForm Global (GLBL), warned in a regulatory filing that SunEdison's liquidity difficulties pose "a substantial risk that SunEdison will soon seek bankruptcy protection." Additionally, The Wall Street Journal reported, citing people familiar with the matter, that officials in the SEC's enforcement unit are investigating SunEdison's disclosures to investors about how much cash it had on hand as its stock price collapsed last year...

Medivation (MDVN) dropped 6% on Tuesday after members of Congress urged the National Institutes of Health to hold a hearing on the pricing of Xtandi, the company's prostate cancer drug, and consider exercising its authority to disperse the patents covering Xtandi to Medivation's competitors. However, the stock rebounded, gaining back those losses and ending the week with a gain of about 8.5% after Bloomberg reported that the company has hired advisers to defend against a potential takeover...

Among the notable gainers immediately following their earnings reports were Lululemon (LULU), Restoration Hardware (RH) and Carnival (CCL), while BlackBerry (BBRY) and Verint (VRNT) declined right after issuing their own quarterly reports.

INDEXES: The Dow (DIA) gained about 1.4% to close at 17,792.75; the S&P 500 (SPY) rose about 1.6% to close at 2,072.78; the Nasdaq (QQQ) advanced about 2.7% to close at 4,914.54.