Wall Street climbs 1 percent on central bank comments

By Ryan Vlastelica

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  Reuters/Reuters - Traders work on the floor at the New York Stock Exchange, May 21, 2013. REUTERS/Brendan McDermid

NEW YORK (Reuters) - Stocks rallied more than 1 percent on Tuesday as supportive comments from central banks around the world reassured investors that monetary policies designed to support the global economy would remain in place.

Equities have been closely tethered to monetary policy, with major U.S. 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.

Both the Bank of Japan and the European Central Bank reaffirmed that their policies would remain in place. On Monday, when U.S. 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.

"Investors want to make sure that everyone is in the same boat, since monetary policy has been the mother's milk of the rally so far this year and there was some concern that policy would be changed or amended," said Paul Nolte, managing director at Dearborn Partners in Chicago.

Monetary stimulus has contributed to Wall Street's gains this year, with the S&P 500 up almost 17 percent. Analysts have also cited earnings growth and relatively cheap valuations as reasons investors have used any market decline as a buying opportunity, helping lift both the S&P and Dow to a series of new 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 percent to $13.45 while Citigroup Inc was up 2.2 percent at $51.61.

The Dow Jones industrial average <.dji> was up 170.22 points, or 1.11 percent, at 15,473.32. The Standard & Poor's 500 Index <.spx> was up 20.02 points, or 1.21 percent, at 1,669.62. The Nasdaq Composite Index <.ixic> was up 46.86 points, or 1.35 percent, at 3,506.00.

Investors will be watching the S&P's 14-day moving average of 1,647.91. On Friday, the benchmark index briefly fell below that level though it subsequently rebounded and closed above it. If the index remains below that level for a protracted period, it could portend waning momentum.

In the latest economic data, consumer confidence jumped far more than expected in May, climbing to 76.2 from a revised 69 in the previous month. Analysts were looking for a reading of 71.

Home prices rose 1.1 percent in March, according to the latest S&P/Case Shiller data. Analysts were looking for a rise of 1 percent.

Luxury retailer Tiffany & Co reported adjusted earnings and sales that beat expectations, sending shares up 4.8 percent to $79.81, the biggest percentage gainer on the S&P.

Abercrombie & Fitch Co late Friday reported a wider-than-expected quarterly loss, though the loss narrowed from the previous year. Shares rose 1.4 percent to $50.80.

With 486 S&P companies having reported, 66 percent have topped earnings expectations, about even with the 67 percent beat rate over the past four quarters. Only 46 percent of companies have beaten on revenue, lower than the 52 percent rate over the past four quarters.

Omthera Pharmaceuticals soared 96 percent to $13.27 after AstraZeneca agreed to buy the company for $443 million. U.S. shares of Astra gained 2.4 percent to $53.42.

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