By Ankur Banerjee and Tanya Agrawal
REUTERS - U.S. stocks posted modest gains in early afternoon trading on Thursday as technology stocks rose, while investors shifted their attention to second-quarter earnings.
A rise in shares of Apple, Microsoft and Alphabet provided the biggest boost to the S&P and the Nasdaq.
Global equity markets rallied after Federal Reserve Chair Janet Yellen signaled a more gradual tightening of monetary policy than expected on Wednesday.
The U.S. economy is healthy enough for the Fed to raise rates and begin winding down its massive bond portfolio, though low inflation and a low neutral rate may leave the central bank with diminished leeway, Yellen said.
Yellen wrapped up her two-day testimony before Congress on Thursday and said it would be "quite challenging" for the U.S. to reach the three percent growth target set by President Donald Trump.
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"Yesterday's move was in response to Yellen comments that should inflation remain below the 2 percent target rate, the central bank will be less aggressive in their tightening program," said Sam Stovall, chief investment strategist at CFRA Research.
"Today, the market is saying that's old news and let's focus on the matter at hand, which is earnings that will be coming out in earnest this week."
Quarterly earnings will kick off on Friday with big U.S. banks including JPMorgan Chase, Wells Fargo and Citigroup reporting results.
The financial index was the second-largest gainer among the 11 major S&P sectors, rising 0.47 percent.
Second quarter earnings are expected to increase 7.8 percent from a year ago, after first-quarter earnings posted their best performance since 2011, according to Thomson Reuters I/B/E/S.
At 12:48 p.m. ET (1648 GMT), the Dow Jones Industrial Average was up 26.5 points, or 0.12 percent, at 21,558.64, the S&P 500 was up 4.84 points, or 0.19 percent, at 2,448.09.
The Nasdaq Composite was up 13.26 points, or 0.21 percent, at 6,274.43.
Data showed U.S. producer prices unexpectedly rose in June. In the 12 months through June the producer level inflation, or PPI, increased 2.0 percent, above the 1.9 percent rise expected.
Another set of data showed weekly jobless claims fell last week for the first time in a month.
Among stocks, Target rose 4.5 percent after the retailer gave an upbeat second-quarter forecast. The news boosted other retailers, with Wal-Mart up 1.4 percent and Costco edging up 0.8 percent.
Declining issues outnumbered advancers on the NYSE by 1,462 to 1,364. On the Nasdaq, 1,721 issues fell and 1,046 advanced.
(Reporting by Ankur Banerjee and Tanya Agrawal in Bengaluru; Editing by Arun Koyyur)