Also, St. Louis Federal Reserve President James Bullard said that rates being kept “too low for too long”, could result in “future financial instability even if it doesn’t” show that the US economy is in “that situation today”.
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Wall Street surged more than 1% on Tuesday and the Nasdaq had its strongest day in three months as a rally in financial and technology shares underpinned a sharp, broadly based stock-market advance. Japan’s Nikkei 225 index slipped 1.1%.
Minutes of the Federal Reserve’s April meeting suggested a June rate hike had not been ruled out, surprising investors who had thought the Fed would stand pat until the end of the year.
“Today’s big jump is purely a technical bounce and if [the S&P 500 holds] above the 50-day moving average, which we just crossed over, we might see some more upside in the market”, said Lance Roberts, chief investment strategist at Clarity Financial LLC.
The materials sector’s 1.41 percent rise led the advancers, boosted by Monsanto’s 5.6 percent jump. The S&P 500 gained 27.97 points, or 1.4%, to 2,076, its strongest daily gain since March 11.
The Dow moved higher as gains in shares of DuPont and those of Apple, trading 2 percent and 1.6 percent higher respectively, outweighed declines in shares of Verizon and those of Microsoft, recently trading 1 percent and 0.8 percent weaker respectively.
Several Fed officials struck hawkish tones in separate speeches on Monday, calling for two or three rate hikes in 2016 if supported by economic data. Data yesterday showed purchases of new homes surged in April to the highest level since the start of 2008, and investors will scrutinize comments from Fed Chair Janet Yellen later this week, as well as a key government payrolls report due on June 3.
The gains were broad-based, with all 10 S&P sectors higher. The CBOE Volatility Index climbed 4.1 percent to 15.82, after rising for two consecutive weeks for the first time since February. Among the S&P 500 shares, almost a fifth were up more than 2%, another 40% were up more than 1%, while less than 10% were in negative territory.
The S&P 500 index showed six new 52-week highs and no new lows, while the Nasdaq recorded 38 new highs and 16 new lows.
Toll Brothers shares were up 8 percent at $29.26 as the company’s quarterly revenue beat expectations.
Late in the day, oil prices extended gains in post-settlement trading after data showed a much bigger-than-expected reduction in USA crude inventories.
Just 5.9 billion shares changed hands on USA exchanges, well below the 7.2 billion daily average for the past 20 trading days, according to Thomson Reuters data.
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Declining issues outnumbered advancing ones on the NYSE by 1,342 to 1,240.
