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Stocks rallied on Tuesday following their first three-day losing streak of the year, after central banks reassured investors that they will keep policies designed to foster global growth.
Further boosting the market, data showed consumer confidence was the strongest in May in over five years, while home prices accelerated in March by the most in nearly seven years.
The economic reports on housing and consumers suggested resilience for an economy despite the pinch of belt-tightening from automatic cuts in federal spending.
Equity investors have been very attuned to monetary policy, with the major US stock indexes last week posting their first negative week since mid-April on lingering concerns that the Federal Reserve may scale back its stimulus measures sooner than expected.
But the Bank of Japan and the European Central Bank reaffirmed that their accommodative policies would remain in place, helping the S&P 500 recover nearly all of the losses suffered in the previous three sessions.
On Monday, when US markets were closed for the Memorial Day holiday, ECB Executive Board member Joerg Asmussen said the policy would stay as long as necessary. On Tuesday, BoJ board member Ryuzo Miyao said it was vital to keep long- and short-term interest rates stable.
Monetary stimulus has contributed to Wall Street's gains this year, with the S&P 500 up about 17 per cent. Analysts have also cited earnings growth and relatively cheap valuations as reasons that investors have used any market decline as a buying opportunity, helping drive both the Dow and the S&P 500 to a series of record highs.
Cyclical sectors, closely tied to the pace of economic growth, are likely to advance on any sign of continued supportive policies. Bank of America rose 1.6 per cent to $13.45 while Citigroup Inc gained 1.9 per cent at $51.49. The KBW Bank index advanced 1.4 per cent.
The Dow Jones industrial average gained 141.61 points, or 0.93 per cent, to 15,444.71. The Standard & Poor's 500 Index gained 14.49 points, or 0.88 per cent, to 1,664.09. The Nasdaq Composite Index gained 35.71 points, or 1.03 per cent, to 3,494.86.
