U.S. stocks rallied to nearly a five-month high on Tuesday on growing conviction that central banks will do even more to bolster struggling economies worldwide.
The Bank of Japan lit the fuse overnight when it unexpectedly cut rates closer to zero and said it would pour money into the markets through asset purchases. This move came as markets increasingly believe the U.S. Federal Reserve will stimulate the world's largest economy in a similar fashion.
"The thinking today is that the printing of money is going to take place," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
"The short-term impact of that is to drive asset prices higher. We've seen it almost across the board in commodities."
The likelihood of quantitative easing in the United States hit the greenback and lifted commodity prices, while resource stocks drove the S&P 500 through the 1,150 resistance level.
Crude oil hit a five-month peak near $83 a barrel and gold hit another record high at $1,341.20 an ounce. The materials sector .GSPM led the S&P 500, gaining 2.8 percent, with mining company Freeport-McMoRan Copper & Gold jumping 4.6 percent to $91.21.
Growing expectations of another round of quantitative easing from the Fed have fueled enthusiasm for equities of late. A top Fed official said in an interview published on Tuesday that the central bank should do "much more" monetary easing to spur a sluggish economic recovery.
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Dow Jones Industrial Average
(DJI: ^DJI)| Index Value: | 10,944.72 |
|---|---|
| Trade Time: | 4:02PM EDT |
| Change: |  193.45 (1.80%) |
| Prev Close: | 10,751.27 |
|---|---|
| Open: | 10,752.78 |
| Day's Range: | 10,752.63 -10,965.61 |
| 52wk Range: | 9,596.04 -11,309.00 |
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