Dow, S&P Strike Fresh Highs in Broad Rally


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The Dow and S&P 500 roared to fresh all-time highs Tuesday in a broad rally that was led by the financial sector.

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Today's Markets

The Dow Jones Industrial Average jumped 123 points, or 0.82%, to 15215, the S&P 500 rallied 16.7 points, or 1%, to 1650 and the Nasdaq Composite soared 23.8 points, or 0.69%, to 3463.

Every major sector ended higher, with six of ten advancing by more than 1%. Financial stocks, like Bank of America (NYSE:BAC) and J.P. Morgan Chase (NYSE:JPM) posted the biggest gains by a wide margin. Health care, utilities, energy and consumer discretionary stocks also performed well.

The Dow ended in the green for the eighteenth Tuesday in a row, while the S&P 500 notched its third-straight daily advance. While the Dow and S&P 500 ended at record highs, the Nasdaq closed at its highest level in nearly 13 years. In a sign of the breadth of the recent rally, 65 S&P 500 components hit all-time highs on the day.

Market participants cited a generally upbeat sentiment as the impetus for the recent leg higher on Wall Street.

"The economy continues to expand, albeit a very quiet rate, so stocks continue to be the risk of choice these days," Todd Schoenberger, managing partner at LandColt Capital wrote in an e-mail. Schoenberger said optimism that the Federal Reserve will continue buying assets at a rapid pace is also playing into the move into equities.

"Realistically, (the drive into equities) will continue deep into summer unless a catastrophic economic event were to happen," he wrote.

Fed Talk Still in Focus

Wall Street has been fixated so far this week on mounting discussions of the Federal Reserve's exit from its vast quantitative easing program. Currently, the central bank is adding to its balance sheet at rate of $85 billion a month -- a move aimed at lowering long-term interest rates. However, critics worry about the inflationary pressure the highly-accommodative stance might cause.

Philadelphia Fed President Charles Plosser, currently an alternate on the central bank's policy-setting board, once again pushed for the Fed to begin slowing down its quantitative easing program. In a speech in Sweden, he said the Fed could begin slowing down the pace of asset purchases by the June meeting, and then halt them altogether by the end of the year.

Also on the economic front, the Commerce Department said U.S. import prices slid 0.5% in April from March, matching economists' expectations. Export prices dropped 0.7%, the largest decline since June, and steeper than forecasts of a 0.2% dip.

In Europe, a closely-watched survey on German economic sentiment from the ZEW Institute came in well below expectations. The gauge came in at 36.4 in May, well shy of economists' forecasts of 40. The data point a picture of an economy that is still struggling with headwinds from the eurozone debt crisis.

Elsewhere, in corporate news, Daniel Loeb's Third Point has urged Sony (NYSE:SNE) to sell part of its entertainment division in an initial public offering. Citigroup (NYSE:C) upped its price target on Wal-Mart (NYSE:WMT), the blue-chip retailer, by $7 to $89 a share.

Commodities markets were mixed. U.S. crude oil futures fell 96 cents, or 1%, to $94.21 a barrel. Wholesale New York Harbor gasoline rose 0.59% to $2.876 a gallon. In metals, gold dropped $9.80, or 0.68%, to $1,425 a troy ounce.

Foreign Markets 

The Euro Stoxx 50 dipped 0.3% to 2769 the English FTSE 100 slipped 0.12% to 22930 and the German DAX fell 0.1% to 8271.

In Asia, the Japanese Nikkei 225 slumped 0.16% to 14748 and Chinese Hang Seng dropped 0.26% to 22930.

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