Wall Street rose on Friday and was headed for its strongest week since March after U.S. Federal Reserve Chair Janet Yellen said an interest-rate hike would likely be appropriate "in the coming months."
Yellen's is the most important voice in a chorus of policymakers recently suggesting that the U.S. economy has improved enough to warrant tighter borrowing costs, with a growing number of investors now expecting a hike in June or July.
While higher interest rates choke liquidity in stock markets, many investors see a potential rate hike as a vote of confidence that the struggling U.S. economy is finding its legs.
"As we look at our place in the global economy, things just seem to be improving to a point where it certainly looks likely that June or July will be the next launching point," said Paul Springmeyer, portfolio manager at the Private Client Reserve of U.S. Bank.
"With the increased strength, we should get up off of those historically low levels where we are."
After Yellen's speech, traders raised their expectations of a June rate hike to 34 percent from 30 percent, according to CME Group.
The Fed next meets on June 14-15.
Data on Friday showed U.S. economic growth slowed in the first quarter, although not as sharply as initially thought.
The energy sector .SPNY dipped 0.36 percent as oil dipped on concerns that a recent rebound could lead producers to increase output.
The Nasdaq Composite .IXIC added 0.46 percent to 4,924.13.
The S&P 500 was on track to end the week over 2 percent higher, its best weekly performance since mid-March.
Six of the 10 major S&P sectors were higher, with the technology .SPLRCT and financial .SPSY indexes leading the gainers.
Cyber security firm Palo Alto's (PANW.N) shares dropped 12.38 percent after a wider-than-expected quarterly loss.
GameStop (GME.N) fell 4.1 percent after the video-game retailer forecast lower-than-expected revenue and profit for the current quarter.
Advancing issues outnumbered decliners on the NYSE by 1,867 to 1,096. On the Nasdaq, 1,871 issues rose and 901 fell.
The S&P 500 index showed 20 new 52-week highs and no new lows, while the Nasdaq recorded 61 new highs and 17 new lows.
(Additional reporting by Tanya Agrawal; Editing by Nick Zieminski)
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Published Date: May 28, 2016 01:15 AM | Updated Date: May 28, 2016 01:15 AM