Wall Street rallies on tax reform hopes

By Kimberly Chin

(Reuters) - U.S. stocks were trading higher on Tuesday, with each of the three major indexes on track for their best one-day percentage gains in over a week, as investors responded positively to lawmakers' comments on tax reform and the debt ceiling.

U.S. House Speaker Paul Ryan indicated that tax reform would be easier to pass than the failed healthcare overhaul because Republicans have built a consensus.

Senate Majority Leader Mitch McConnell said on Monday that there was "zero chance" that the United States will fail to raise the debt ceiling, allaying concerns that the United States is poised to default on its debt.

 

"Most of the investors that were on the sidelines just needed a little bit of a flare gun that was positive to say that these next few weeks, we're going to get through them pretty well," said Chris Hyzy, the chief investment officer at Bank of America's Global Wealth & Investment Management in New York.

Absent major news from the White House and a standstill in tensions between the United States and North Korea - two major factors that roiled the market in the past two weeks - investors flocked to high-flying tech shares and other high-yielding assets.

Gains were broad-based, with only two of the 11 major S&P sectors in the red. Technology <.SPLRCT> shares led the advance, up 1.4 percent and on pace for its first gain in four sessions.

The materials <.SPLRCM> index also jumped more than 1 percent, poised for its best day in four weeks, boosted by rising commodity and metals prices.

Metals prices, including of copper , zinc and nickel , were higher against a backdrop of strong results for mining firms and talk of shortages in some metals. [MET/L]

The Dow Jones Industrial Average <.DJI> rose 187.5 points, or 0.86 percent, to 21,891.25, the S&P 500 <.SPX> gained 22.91 points, or 0.94 percent, to 2,451.28 and the Nasdaq Composite <.IXIC> added 80.54 points, or 1.3 percent, to 6,293.67.

So far, 310 stocks have hit new 52-week highs, while 282 have hit fresh 52-week lows across all U.S. exchanges. If the ratio holds, it will mark the first time in 10 sessions that more stocks have hit highs than lows.

Investors also await the annual central bankers meeting in Jackson Hole, Wyoming, later this week. Federal Reserve Chair Janet Yellen's speech on Friday will be closely watched for hints on U.S. monetary policy, but central bank observers do not expect her to give new guidance.

Among stocks, Freeport-McMoRan Inc gained 2.34 percent on news that Indonesia expects to strike an agreement this month to allow the miner to keep operating its copper mine in Papua.

Macy's Inc rose 4.60 percent, putting the stock on track for its best day in nearly seven months, after announcing restructuring and job cuts.

DSW Inc shares surged 17.21 percent after the footwear retailer reported a surprise rise in comparable sales.

Advancing issues outnumbered declining ones on the NYSE by a 2.71-to-1 ratio; on Nasdaq, a 2.47-to-1 ratio favoured advancers.

(Reporting by Kimberly Chin in New York; Additional reporting by Chuck Mikolajczak and Sinead Carew in New York, and Sruthi Shankar in Bengaluru; Editing by Lisa Shumaker)