Dow gains 596 points as markets rebound after Fed Chair's testimony

March 2 (UPI) -- U.S. markets rebounded on Wednesday as Federal Reserve Chairman Jerome Powell said the central bank was committed to hiking interest rates in testimony before Congress.

The Dow Jones Industrial Average gained 596.4 points, or 1.79%, while the S&P 500 rose 1.86% and the Nasdaq Composite closed the day with an increase of 1.62% after all three markets were in the red Tuesday amid intensifying fighting between Russia and Ukraine.

Powell on Wednesday said that he favors a small rate increase -- a quarter-point -- following the Fed's next policy meeting from March 15-16, despite calls for a larger hike from some analysts who are concerned about rising inflation.

He added that a larger rate hike could come if inflation does not wane as predicted and that the central bank "will proceed carefully as we learn more about the implications of the Ukraine war for the economy."

"Today's testimony is kind of a sanity check; 25 basis points is an incremental positive, and from a markets perspective it is providing visibility," Fundstrat's Tom Lee told CNBC. "I think what we're seeing today is really markets were positioned for a much more hawkish Fed and a much more dire outlook."

Government bond yields saw a rebound Wednesday with the benchmark 10-year yield rising near 1.89% after falling below 1.7% on Tuesday, helping to lift bank stocks as Wells Fargo gained 3.84% and Goldman Sachs rose 2.49%.

Elsewhere Caterpillar stock rose 5.35% and Intel stock increased 4.38% to lead the Dow higher.

Oil prices continued to rise amid the ongoing conflict in Ukraine with West Texas Intermediate crude futures trading as high as $112.51 per barrel Wednesday morning before settling closer to $111, sending Chevron stock about 3% higher.

Prices rose despite the International Energy Agency agreeing Tuesday to release 60 million barrels of oil from global emergency stockpiles in an effort to combat the climbing cost of oil.

"The problem is that would not be enough to offset a potential supply shock coming from Russia, which is really what the market is grappling with right now," Ahmed Riesgo, Insigneo chief investment officer, told Yahoo Finance.