U.S. stocks rose on Tuesday and the S&P notched its best performance in a month after a report shifted investor expectations for the Federal Reserve's policy statement due on Wednesday.
After a sluggish start to trading, major indexes rallied with participants citing a report in the Wall Street Journal as indicating the Fed could be less hawkish than markets have been expecting, as investors try to divine when the central bank will hike interest rates.
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The Fed began its two-day policy meeting on Tuesday, and while it has said it doesn't expect to raise rates until 2015, recent strong economic data has led Fed officials to acknowledge they may need to move sooner than they previously anticipated.
"We all know the rate change is coming sometime during 2015, but people are kind of splitting hairs to try to decide if it is going to be early in the second quarter or late in the second quarter, and that is what all of this is about right now," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.
"It’s a little surprising (investors) would go ahead and jump out in front of the Fed to drive the market up in that case, that’s a bit of a surprise there, and it could be that it all goes away tomorrow."
Each of the ten major S&P sectors finished in positive territory and the Dow managed to hit a new intraday record, although it closed about 6 points shy of a closing record.
Healthcare <.SPXHC>, up 1.3 percent and energy <.SPNY>, up 1.2 percent, paced the advance. Energy shares moved higher as crude oil prices climbed, while utilities <.SPLRCU>, up 1.2 percent, a proxy for investor appetite for dividend payers, also rose.
The Dow Jones industrial average <.DJI> gained 100.83 points, or 0.59 percent, to 17,131.97, the S&P 500 <.SPX> rose 14.85 points, or 0.75 percent, to 1,998.98 and the Nasdaq Composite <.IXIC> added 33.86 points, or 0.75 percent, to 4,552.76.
The largest percentage gainer on the New York Stock Exchange was Glimcher Realty Trust <GRT.N>, which jumped 29.8 percent after Washington Prime <WPG.N> announced the purchase of Glimcher for $4.3 billion. The largest percentage decliner was Atlantic Power <AT.N>, which slumped 32.5 percent after the struggling utility removed its chief executive and decided against selling itself.
Among the most active stocks on the NYSE were Bank Of America <BAC.N>, down 0.18 percent to $16.71; Petrobras <PBR.N>, up 5.86 percent to $17.51; and Glimcher, up 29.84 percent to $13.75.
On the Nasdaq, Apple Inc <AAPL.O>, down 0.8 percent to $100.86; Yahoo Inc <YHOO.O>, up 0.4 percent to $42.71; and Sirius XM Holdings <SIRI.O>, up 0.6 percent to $3.61, were among the most actively traded.
Advancing issues outnumbered declining ones on the NYSE by 1,943 to 1,095, for a 1.77-to-1 ratio on the upside; on the Nasdaq, 1,441 issues rose and 1,253 fell for a 1.15-to-1 ratio favoring advancers.
The broad S&P 500 index posted 25 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 29 new highs and 98 new lows.
Volume was active, with about 6.12 billion shares traded on U.S. exchanges, above the 5.6 billion average so far this month, according to data from BATS Global Markets.
(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)