May 28, 2013 at 12:16 PM ET
Stocks shaved their gains but still ended in positive territory across the board Tuesday, buoyed by supportive comments from central banks around the world and some upbeat economic data.
The blue-chip index finished higher at 15,409.39 after the three-day holiday weekend.
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"If you believe in calendar folklore, the day after a three-day weekend has a bias to the upside and the final week of the month has a bias to the upside and it's terrific Tuesday again," noted Art Cashin, director of floor operations at UBS Financial Services. Cashin also noted that trading volume has been on the lighter side.
The Dow Jones Industrial Average shaved its gains but still logged a triple-digit gain, led by Cisco and United Health. The Dow was up 218 points at session high.
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Last week, all three major averages logged weekly losses for the first time in five weeks, rattled by worries the Federal Reserve may soon start to pare back its bond buying.
"The great fear here is that if people truly become convinced that the Fed is going to change course, then everyone's going to race to get out of the bond market and do something different," said Cashin. "And what point do yields go high enough to begin to be counter-productive?"
Housing data helped pushed stock upwards. Single-family home prices rose 1.1 percent in March, according to the S&P/Case Shiller composite index of 20 metropolitan areas, logging their best annual gain in nearly seven years. Economists expected a reading of 1 percent. Prices in the 20 cities jumped 10.9 percent year over year, beating expectations for 10.2 percent and the biggest increase since April 2006.
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Also on the economic front, consumer confidence strengthened in May to the highest level since February 2008, according to the Conference Board. The index jumped to 76.2 from an upwardly revised 69 in April, beating expectations for 71.
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Meanwhile, both the Bank of Japan and the European Central Bank reaffirmed that their policies would remain in place. On Monday, 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.
"I think it's a sigh of relief coming out of Tokyo," said Cashin of the session's rally. "[Japan's] had some wild action over the last few sessions and people were beginning to worry that perhaps there was kickback to what Mr. Abe and his team were trying to get done. The yields there were rising very sharply so people were worried that things were coming apart but instead, things have calmed down and that made Europe feel better."
Treasury bonds extended losses, boosting yields up to new highs for the year. The yield on benchmark 10-year Treasury notes surged to 2.122 percent, taking out the previous intraday high of 2.087 percent hit on March 8.
The government sold $35 billion in 2-year notes at a high yield of 0.283 percent. The bid-to-cover, an indicator of demand, was 3.04. The Treasury will auction $35 billion in five-year notes on Wednesday and $29 billion in seven-year notes on Thursday.
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