S&P within 1.0% of record after Yellen speech

The Standard & Poor's 500 set a 2016 closing high Monday after Federal Reserve chair Janet Yellen painted a relatively upbeat view of the U.S. economy despite the weak May jobs report but also ticked off enough headwinds for Wall Street to conclude that an interest rate hike next week is off the table.

The major indexes dipped slightly after Yellen began delivering her remarks at 12:30 p.m. ET but recovered by the time she finished and gained some steam as the afternoon wore on. The Dow Jones industrial average ended up 113 points, or 0.6%, to 17,920 and within 80 points of cracking the 18,000 barrier. The Dow hit an intraday high of 17,944.78.

The broader Standard & Poor's 500 stock index was up 0.5% and 9 points above the 2100 level and the technology-packed Nasdaq composite gained 0.5%. The broad market gauge is now within 1% of its May 2015 all-time closing high.

It was Yellen's first comments since Friday's weak jobs report, a number so far under expectations that Wall Street all but ruled out a June rate hike.

In a speech that Wall Street was closely scrutinizing, Yellen noted that the Fed still feel it is appropriate to gradually increase borrowing costs if the the labor market regains momentum and inflation perks up. But the Fed chair did not specify any fresh timetable for the next hike, and acknowledged the Fed is monitoring the recent weakness in the labor market and possible financial disruptions in the event that Britain votes to exit the European Union later this mointh.

Yellen's comments, which mixed in positives and negatives driving the Fed's evaluation of the economy's health, hinted at pushing back the timing of the next hike but wasn't hawkish enough to take a July hike off the table completely, either.

Chief market strategist Brett Ewing of First Franklin believes that the Fed has finally learned what it means to be data dependent.

"It is our view that market participants have once again realized the Fed is on their side," says Ewing, who believes the Fed will hold off on rate hikes in both June and July.

Paul Ashworth, chief U.S. economist at Capital Economics, says two things must happen for the Fed to move in July. A July hike "will require a bounce-back in June's employment figures and a vote by the U.K. to remain in the EU."

Investors got a shock on Friday when the government reported that the U.S. economy only created 38,000 jobs in May, well below the forecast of roughly 160,000 jobs. Still, U.S. stocks held up well despite the weakening trend in the job market, with the Dow falling only 32 points Friday and the broad market finishing the week unchanged.

"All things considered, equities held up well on Friday in light of the payroll miss," Chris Verrone, analyst at Strategas Research Partners noted in a report. "The continued resiliency of the tape is noteworthy."

Job gains weaken dramatically: Only 38,000 added in May

The surprisingly weak reading on employment -- the biggest miss vs. expectations in 2 1/2 years, according to Bespoke Investment Group -- rules out an interest rate hike from the Fed at its meeting next week, according to Wall Street. Still, there is still debate as to whether one data point is enough to keep the U.S. central bank from hiking at its July meeting, assuming the June jobs report comes in stronger. The odds of a June hike are less than 4% and chances of a move in July are less than 1 in 3, according to CME Group.

"This is the last time Yellen will speak publicly before the blackout period preceding the June 15 Fed meeting," Bill Stone, chief investment strategist at PNC Asset Management Group, told clients in a morning note.

Meanwhile, Boston Fed President Eric Rosengren earlier this morning acknowledged that Friday's payrolls report was "disappointing," but said he still expects economic growth to "justify a gradual removal of accommodation" over time, Josh Selway, an analyst at Schaeffer's Investment Research, noted in an e-mail.

The stock maket is also getting a boost from higher prices in the oil patch. U.S. produced crude was up $1.05, or 2.2%, to $49.67, once again closing in on the key $50 per barrel mark.

Stocks were modestly higher in Europe with the broad Stoxx Europe 600 closing up 0.3%.