Positive sentiment was also generated in reaction to remarks by Treasury Secretary Janet Yellen, who said the government is prepared to once again take action to protect bank depositors if smaller lenders are threatened.
At the close of trade, the Dow Jones Industrial Average index inclined 316.02 points, or 0.98%, to 32,560.60. The S&P500 index rose 51.30 points, or 1.3%, to 4,002.87. The tech-heavy Nasdaq Composite Index advanced 184.57 points, or 1.58%, to 11,860.11.
Total 9 of 11 S&P500 sectors ended higher. Energy was top performing sector, adding 3.45%, as crude oil for May delivery jumped $1.85 to $69.67 a barrel, extending the rebound seen on Monday. Meanwhile, consumer discretionary (up 2.71%), financials (up 2.54%), communication services (up 2.45%) and materials (up 1.23%) sectors were also higher.
Positive sentiment on Wall Street generated on easing concerns about turmoil in the financial sector following recent steps taken to rescue distressed banks in the U.S. and Europe. The extended rally was also supported by US Treasury Secretary Janet Yellen statement on Tuesday at an event hosted by the American Bankers Association that the federal government was willing to guarantee more deposits should the current banking meltdown continue.
Investors were also buoyed by news that JPMorgan Chase CEO Jamie Dimon was advising the beleaguered First Republic Bank on next steps and strategy.
Investors are closely focus on the Fed's decision when policymakers conclude a two-day meeting on Wednesday, with CME Group's FedWatch Tool currently indicating a 26.9% chance interest rates will remain unchanged and a 73.1% chance of a 25-basis point rate hike.
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