Stocks shaved their gains but still ended in positive territory across the board Tuesday following a long holiday weekend, buoyed by supportive comments from central banks around the world and a pair of upbeat economic data.
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The blue-chip index finished higher for the 20th-straight Tuesday. The last time the index even got this far was in 1927 when the Dow closed up 15 consecutive Tuesdays between June 1927 and September 1927.
"If you believe in calendar folklore, the day after a three-day weekend has a bias to the upside and the final week of the month has a bias to the upside and it's terrific Tuesday again," noted Art Cashin, director of floor operations at UBS Financial Services. Cashin also noted that trading volume has been on the lighter side.
The Dow Jones Industrial Average shaved its gains but still logged a triple-digit gain of 106.29 points to end at 15,409.39, led by Microsoft and United Health. The Dow was up 218 points at its session high.
The S&P 500 rose 10.46 points, to close at 1,660.06. And the Nasdaq advanced 29.74 points, to finish at 3,488.89. Both indexes closed higher for the 10th-consecutive Tuesday. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, finished above 14.
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Most key S&P sectors closed higher, led by banks and energy, while telecoms and utilities declined.
Last week, all three major averages logged weekly losses for the first time in five weeks, rattled by worries the Federal Reserve may soon start to pare back its bond buying.
"The great fear here is that if people truly become convinced that the Fed is going to change course, then everyone's going to race to get out of the bond market and do something different," said Cashin. "And what point do yields go high enough to begin to be counter-productive?"
Single-family home prices rose in March, according to the S&P/Case Shiller composite index of 20 metropolitan areas, logging their best annual gain in nearly seven years.
Most homebuilders traded higher, led by Beazer and DR Horton. The U.S. Home Construction ETF is up nearly 20 percent this year. Housing-related stocks have nearly quadrupled since their March 2009 low, but they're still about 30 percent below the July 2005 peak.
(Read More: Home Builders Ride Recovery Wave)
Also on the economic front, consumer confidence strengthened in May to the highest level since February 2008, according to the Conference Board.
(Read More: A Too-Strong US Economy? Why Everyone's Watching)
Meanwhile, both the Bank of Japan and the European Central Bank reaffirmed that their policies would remain in place. On Monday, ECB Executive Board member Joerg Asmussen said the policy would stay as long as necessary. On Tuesday, BOJ board member Ryuzo Miyao said it was vital to keep long- and short-term interest rates stable.
"I think it's a sigh of relief coming out of Tokyo," said Cashin of the session's rally. "[Japan's] had some wild action over the last few sessions and people were beginning to worry that perhaps there was kickback to what Mr. Abe and his team were trying to get done. The yields there were rising very sharply so people were worried that things were coming apart but instead, things have calmed down and that made Europe feel better."
Tiffany shot higher after the upscale jeweler posted better-than-expected quarterly results. Last year, Tiffany's results were hurt by signs of a slowdown in China and disappointing sales of its silver jewelry.
Merck gained after Jefferies upgraded the pharmaceuticals giant to "buy" from "hold" and called the company among the best restructuring plays in the drug group.
Valeant Pharmaceuticals zipped higher after the Canadian drugmaker agreed to acquire privately-held Bausch & Lomb in a deal worth $8.7 billion.
Tesla extended its rally after the electric car maker's stock-and-note offering last week that raised nearly $1 billion and following recent positive comments from Goldman Sachs.
Treasury bonds extended losses, boosting yields up to new highs for the year. The yield on benchmark 10-year Treasury notes surged to 2.122 percent, taking out the previous intraday high of 2.087 percent hit on March 8.
The government sold $35 billion in 2-year notes at a high yield of 0.283 percent. The bid-to-cover, an indicator of demand, was 3.04. The Treasury will auction $35 billion in five-year notes on Wednesday and $29 billion in seven-year notes on Thursday.
—By CNBC's JeeYeon Park. Follow JeeYeon on Twitter:
Coming Up This Week:
WEDNESDAY: MBA mortgage applicaitons, Bank of Canada announcement, 5-yr note auction, ExxonMobil shareholder mtg; Earnings from Chico's, Michael Kors
THURSDAY: GDP, jobless claims, corporate profits, pending home sales index, natural gas inventories, oil inventories, 7-yr note auction, Fed balance sheet/money supply; Earnings from Costco, Joy Global, Lions Gate Ent.
FRIDAY: Personal income & outlays, Chicago PMI, consumer sentiment, farm prices, OPEC mtg
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