NEW YORK — Stocks rose sharply on Wall Street on Tuesday as traders turned their focus back to corporate news from the U.S. and hopes that the Federal Reserve will come up with a plan to jump-start the economy. Banks and materials stocks led the market higher.
The Dow Jones industrial average rose 95.51 points to 12,837.33, its highest close in a month. Microsoft was one of the biggest gainers in the Dow. The stock jumped 3 percent after the company announced a new tablet computer called Surface to compete with the immensely popular iPad from Apple. Microsoft was up 86 cents at $30.70.
Stock traders also are latching on to recent signals from the Federal Reserve that the central bank may reveal plans today to stimulate the economy at the end of its two-day meeting.
“A good portion of today’s strong market action is from a hope factor that we’re going to get more easing from the Fed,” said Peter Cardillo, chief market economist at Rockwell Global Capital.
Economists say that even if the Fed does not act after its meeting, it will send a clear message that it is standing by to do so if needed.
Financial companies were among the best performing stocks as investors hoped for Fed action: Bank of America rose 4.5 percent, Citigroup gained 3.5 percent, JPMorgan Chase was up 2.2 percent and Morgan Stanley rose 3 percent.
Bank investors also were pleased to learn that a federal housing agency will clarify the process under which home lenders are forced to buy back soured home loans. The buybacks have cost banks billions of dollars. The uncertainty surrounding how much loans they will have to repurchase from the government has led them to reduce lending.
Material stocks rose on the prospect of demand from home construction. US Steel increased more than 9 percent and Freeport-McMoran Copper rose more than 3 percent.
In other trading, the Standard & Poor’s 500 index rose 13.20 points to 1,357.98. Seven of the 10 industry groups in the S&P rose. The technologyheavy Nasdaq composite index rose 34.43 points to 2,929.76. The Dow Jones Utility average touched the highest level since August 2008 before closing slightly lower.
About five stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume was an average 3.7 billion shares.
Major European stock markets gained: Spain’s IBEX 35 index rose 2.7 percent, Germany’s DAX added 1.8 percent and France’s CAC-40 rose 1.7 percent.
The dollar and Treasury prices fell as traders moved money out of low-risk assets. The dollar fell about a penny against the euro to $1.27 and the yield on the 10-year Treasury note rose to 1.62 percent from 1.58 percent late Monday.
Oracle shares soared 84 cents, or about 3 percent, to $27.96 after the software maker surprised investors with the early release of its fourth-quarter earnings. The results beat Wall Street’s forecasts, and the company said new software licenses increased sharply.
Business, Pages 28 on 06/20/2012