U.S. stocks rose on Tuesday on speculation that the Federal Reserve will announce additional stimulate measures to help the economy later this week.
Weak data in housing and regional factory activity triggered the latest round of bets that [Federal Reserve Chairman Ben] Bernanke will act, even though the Fed's options appear limited. Bernanke speaks to a central bank conference on Friday in Jackson Hole, Wyoming.
The Dow Jones industrial average rose 322.11 points on Tuesday, or 2.97 percent, to 11,176.76. The Standard & Poor's 500 Index was up 38.53 points, or 3.43 percent, to 1,162.35. And the Nasdaq Composite Index gained 100.68 points, or 4.29 percent, to 2,446.06.
"I don't think anybody wants to be too short or negative in front of Bernanke's speech," Jim Awad, managing director at Zephyr Management in New York, told Reuters.
Jack De Gan, chief investment officer at Harbor Advisory Corp, told the news agency the Tuesday's gains were a sign that the market has hit bottom after a string of terrible weeks.
"This is how the start of a rally in an oversold market usually looks like: an aggressive short-term gain like today," De Gan said.
The New York Times reports that stocks dipped briefly after an earthquake hit the East Coast of the United States around 2 p.m. eastern time. The New York Mercantile Exchange was not officially evacuated and trading was not interrupted. And stocks were back up within a half hour.
New economic data out of Asia and Europe also "helped support a feeling" that economies there are not in as bad shape as believed, the Times reports.
"People are maybe thinking there was a rush to judgment on the odds of a double-dip recession," Howard Ward, chief investment officer for the Gamco Growth Fund, told The Wall Street Journal. "Investors are finally coming in, doing some bargain hunting and finding stocks are a very enticing alternative to what's being offered in fixed income markets."
The Journal reports that Bank of America's stocks were the only Dow component to fall on Tuesday, dropping 12 cents, or 1.9 percent, to $6.30. The bank's stock has fallen more than 50 percent since January, and last week it announced that it would be laying off 3,500 employees.