Stocks rallied more than 1 percent across the board Tuesday to close near session highs, but the euro remained near its lowest level against the dollar since July 2010 amid renewed jitters over Spain.
Meanwhile, Facebook tumbled sharply, falling below $29 a share for the first time amid negative sentiment over the company's growth potential. The stock has lost more than 20 percent of its value since its market debut on May 18 at $38 a share and Facebook’s market cap currently stands at $79 billion.
Stocks hit session highs earlier this morning, buoyed by stimulus hopes in China and after Greek election polls pointed to support for pro-bailout parties.
The Dow Jones Industrial Average jumped 125.86 points, or 1.01 percent, to close at 12,580.69, led by BofA and Alcoa . Still, the blue-chip index has yet to see a two-day win streak this month.
The S&P 500 jumped 14.60 points, or 1.11 percent, to end at 1,332.42. The Nasdaq rallied 33.46 points, or 1.18 percent, to finish at 2,870.99.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, traded below 22.
All three major averages are on track for their biggest monthly drop since last September.
Most key sectors were in positive territory, led by materials, while techs dragged.
European shares closed higher, but worries over Spanish banks kept a damper on gains. Egan-Jones downgraded Spain's rating for the third time in the last month, this time to "B" from "BB-" with a negative watch. The euro briefly dropped below $1.25 following the report.
“Normally, we see Europe bringing weakness and U.S. rallying after Europe closes,” said Matt Cheslock, trader at Virtu Financial on CNBC’s “Power Lunch.” “Today, we’ve had the inverse—We had the debt rating cut on Europe but the market itself is surprisingly strong…[But] I’m not so positive on this and so I’m very skeptical of these numbers.”
Meanwhile, investors were encouraged by polls in Greece over the weekend that pointed to support for the pro-bailout party over the leftist organization ahead of the June 17 election.
China's biggest banks have accelerated lending toward the end of the month as Beijing starts to fast-track its approval of infrastructure investments in an effort to stem sagging growth, according to the Shanghai Securities News, citing unidentified sources.
Shares of Opera Software surged amid market talk that Facebook is in discussions to acquire the firmfor its advanced mobile phone software technology.
Chesapeake Energy jumped after activist investor Carl Icahn disclosed a 7.6 percent stakein the natural gas producer and called on the company to replace at least four directors.
JPMorgan Chase has sold an estimated $25 billionof profitable securities in an effort to prop up earnings after suffering losses connected to the bank's now-infamous "London Whale" trader, compounding the cost of those trades.
Samsung Electronics launches its Galaxy S smartphone in Europe, with the third generation model expected to be even more successful than its predecessor. The phone has helped the South Korean company topple Apple as the world's top smartphone maker.
Vertex Pharmaceuticals plunged almost 20 percent after the company released a corrected report of its cystic-fibrosis treatment. Initial results had exceeded expectations earlier this month.
On the economic front, home prices ended the first quarter at new post-crisis lows, according to the report, according to the S&P/Case Shiller composite index of 20 metropolitan areas. And consumer confidence declined to its lowest level in four months, according to the Conference Board.
"The disappointing consumer confidence number is a direct result of higher gas and food prices, which has decimated the household balance sheet," said Todd Schoenberger, managing principal at The BlackBay Group. "Factor in a miserable labor picture, and confidence continues to erode."
—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
WEDNESDAY: Mortgage apps, pending home sales; Earnings from TiVo
THURSDAY: Challenger job-cut report, ADP employment report, GDP, jobless claims, Fed's Pianalto speaks, corporate profits, Chicago PMI, oil inventories, chain-store sales, Zipcar shareholders mtg; Earnings from Joy Global
FRIDAY: Non-farm payrolls, personal income & outlays, ISM mfg index, construction spending, auto sales, Wal-Mart shareholders mtg
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