Stocks rose for a third straight day on Tuesday in a volatile session, after minutes from the latest Federal Reserve meeting boosted expectations the U.S. central bank will act again to stimulate the economy.
Equities surged near the close of the market, though they quickly pared gains, after the release of the Fed's August 9 minutes showed the central bank had considered bold steps to help the fledgling economy.
News earlier in the day showing consumer confidence fell to its worst level in two years cemented the growing belief the Fed will have to intervene with aggressive steps when it meets in late September. Many market participants had thought that the odds of more action from the Fed were slim.
The Fed has recognized that economic conditions may warrant more aggressive actions, which gives hope to the prospect that something will be forthcoming at the next meeting that will provide more to goose risk assets, said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia
At the same time, there's still enough doubt about whether we should expect anything to not want to make the trade, added Luschini, who helps oversee $53 billion in assets under management.
Equities fell as much as 1 percent in the morning after the Conference Board, an industry group, reported consumer confidence crumbled in August to its lowest level in more than two years due in part to fallout from political wrangling over a budget deal.
The market has suffered from a long bout of selling for the better part of August, falling nearly 18 percent from its 2011 high in April to a recent low, though it has risen for six of the last seven sessions.
The Dow Jones industrial average <.DJI> was up 20.39 points, or 0.18 percent, at 11,559.64. The Standard & Poor's 500 Index <.SPX> was up 2.80 points, or 0.23 percent, at 1,212.88. The Nasdaq Composite Index <.IXIC> was up 14.00 points, or 0.55 percent, at 2,576.11.
The rebound into positive territory was seen as a sign recent selling was overdone. Technical analysts pointed to Monday's S&P close above 1,200 as a sign bulls may be regaining their footing. The S&P has risen more than 7 percent over the past seven sessions but remains 6.1 percent lower for August.
Financials were the day's big losers, with Bank of America
In other data, U.S. single-family home prices fell slightly in June as the market crawled along at depressed levels.
Dow component Exxon Mobil Corp
Dollar General Corp's
About 19 stocks rose for every 11 that fell on the New York Stock Exchange, while on the Nasdaq 13 stocks rose for every 12 that fell.
Volume was light, with about 7.2 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 8.47 billion.
(Editing by Leslie Adler)