NEW YORK—U.S. stocks rose Tuesday, propelled by speculation from analysts that the Federal Reserve may be pondering new action to jumpstart the sluggish economy.
The Dow Jones Industrial Average jumped 95 points, or 0.7 percent, at Tuesday’s close, after even bigger intra-day gains. The S&P 500 Index moved up 13 points, or 0.9 percent, while the Nasdaq Composite Index rose 34 points, or 1.1 percent.
The Federal Open Market Committee began its two-day meeting Tuesday, and investors have speculated that the Fed would announce plans Wednesday to extend its Operation Twist to keep interest rates low and the monetary policy loose.
The biggest gainer among Dow components was Microsoft Corp., which announced a new tablet computer—called Surface—to compete with the popular Apple iPad. In the S&P 500, shares of J.C. Penney Co. plunged by almost 9 percent as investors sold off shares following the departure of company President Michael Francis, who came over not too long ago from Target to help boost Penney’s retail prospects. The departure puts a huge dent in the company’s turnaround efforts.
Swiss financial firm Julius Baer is reportedly in talks with Bank of America Corp. to purchase its Merrill Lynch wealth management business outside of the United States. The rumored transaction, which could be worth more than $2 billion, sent shares of Bank of America 5 percent higher Tuesday.
Housing starts, or permits to build new homes, fell 4.8 percent in May.
Traders also kept a wary eye on Europe, where Spain’s short-term borrowing rates rose to sky-high levels and its long-term interest rates remained around 7 percent, an unsustainable level, which had prompted bailouts previously with Ireland and Portugal.
In Greece, the New Democracy Party—fresh off a narrow victory in last Sunday’s elections—is seeking to form a coalition government and hoping to renegotiate the terms of its bailout.
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