Stocks advanced Tuesday as the two-year Treasury auction was met with strong demand and the dollar retreated.
All three major indexes are at their highest levels since last fall: The Dow Jones Industrial Average gained 51.01, or 0.5 percent, to close at 9,829.87. The S&P 500 advanced 0.7 percent and the Nasdaq gained 0.4 percent.
The Dow is now just a few points short of a record point gain for any one quarter—the current record is 1,339 points set in the fourth quarter of 1998. As of today's close, the Dow is up 1,380 points for the quarter, with six trading sessions remaining. It's also within 200 points of the key 10,000 mark.
The Treasury auctioned $43 billion of two-year notes at a high-yield of 1.034 percent. Demand was strong, with a bid-to-cover ratio of 3.23. The five-year auction is Wednesday and the seven-year is Thursday.
The dollar hit a fresh one-year low against the euro, which in turn boosted commodity prices and again boosted the prospects for the stock market.
Crude oil gained nearly $2, settling at $71.55 a barrel.
Investors widely expect the central bank to maintain its accommodative policy to juice the recovery, which gave a boost to growth-related sectors such as financials, techs and industrials.
The top three percentage gainers on the Dow were: JPMorgan, Caterpiller and Alcoa.
Bank of America rose 2.1 percent after Rochdale analyst Dick Bove raised his price targeton the stock to $25 from $19, citing his confidence in the strength of the bank's position.
Citigroup shares rose 5 percent after Singapore's sovereign-wealth fund reduced its stake in the company to less than 5 percent.
Wells Fargo climbed 3.9 percent following news that Chairman Dick Kovacevich plans to retire at the end of the year and CEO John Stumpf will assume the additional role of chairman.
In addition to the dollar's weakness, Alcoa got a boost after Goldman Sachs raised its price target on the stock, citing increasing aluminum prices.
U.S. Steel also benefited from higher metal prices and an analyst upgrade: Bank of America-Merrill Lynch raised its rating to "neutral" from "underperform," saying improving utilization should return the company to profitability next year. Shares rose 4.6 percent.
Two energy companies — Peabody Energy and Massey Energy — were upgraded to "buy" by Citigroup, which said the manufacturing recovery should start to boost coal demand. Both stocks rallied more than 5 percent.
Intel CEO Paul Otellini gave an added boost to techs, saying the personal-computer market is pulling out of its slump andsales could grow this year.
Pfizer advanced after a trial showed switching breast-cancer patient's to the firm's Aromasin half-way through a five-year course of tamoxifen helped improve the patients' chances of staying cancer-free for at least the next six years.
Lowe's skidded 4 percent after the home-improvement chain affirmed its full-year profit view—its fiscal year ends Jan. 29—but warned of charges ahead due to slow sales at stores hit by the economy.
Elsewhere in retail, Macy's shares advanced 5.5 percent after Citigroup upgraded its rating on the stock to "buy."
Cadbury shares ticked higher after the chocolatier's CEO admitted to the Wall Street Journal that a deal with Kraft Foods would have some "complementary elements."
And ConAgra Foods dropped 1.5 percent after the company beat analysts' estimates and raised its earnings forecast for the full year as commodity costs eased and price increases helped lift sales.
Still to come:
WEDNESDAY: Weekly mortgage applications; Geithner testimony; Obama at UN; weekly crude inventories; Fed statement
THURSDAY: G-20 summit begins; weekly jobless claims; existing-home sales; seven-year auction; Earnings from RIM
FRIDAY: Durable-goods orders; consumer sentiment; new-home sales; Earnings from KB Home
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