Industrial and technology stocks pulled the market sharply higher Tuesday after Boeing Co. said it was boosting production and an industry group forecast that demand for computers would increase.
The Dow Jones industrial average rose 213 points to their highest close since May 19 and had their third advance in four days. Major stock indexes rose more than 2 percent.
The advance was broad, but came on light trading volume. That's a sign that many traders are staying out of the market while they wait to see if stocks will keep moving higher after weeks of erratic trading.
Industrials made some of the biggest moves following upbeat news from Boeing Co. and Illinois Tool Works Inc. Boeing rose 4 percent after increasing production of the 737 jet. Boeing said customers are adding to existing orders and placing new ones. ITW rose about 2.5 percent after it raised the lower end of its fiscal second-quarter earnings target.
More good news on industrials came from the New York Federal Reserve, which said regional manufacturing expanded for an 11th straight month in June.
"We're still seeing factories and manufacturing help provide a little stimulus for the economy here," said Michael Church, president at Addison Capital Group in Philadelphia.
Technology stocks got a boost after research firm International Data Corp. raised its forecast for personal computer shipments for 2010. IDC said shipments will be up almost 20 percent from 2010, compared with a forecast of a 15 percent increase made in April. Microsoft Corp. rose 4.3 percent and Hewlett Packard Co. rose 2.4 percent.
A gain in the euro and a drop in the dollar signaled that traders are less worried that debt problems in Europe will disrupt a global recovery. The euro, which is seen as measure of investors' confidence in the European economy, traded at $1.2339. Last week, it fell to a four-year low of $1.1878.
Stocks had dropped along with the euro since May amid growing concerns that weaker European countries such as Greece would default on debt. Investors also were afraid that the budget cuts that countries including Greece, Spain and Portugal have had to implement will slow their economic growth. The concern was that growth across the continent and the rest of the world would also be hurt.
Tuesday's trading shows that investors have started to put aside some of their uneasiness about Europe and focus on continuing signs of strength in the U.S. Still, the market is susceptible to troubling headlines. On Monday, stocks gave up steep gains, partly because Moody's cut its rating on Greece's debt to "junk" status.
Investors are also ready to punish stocks of companies that have disappointing news. Best Buy Co. fell 6.1 percent Tuesday after the electronics chain posted weaker-than-expected earnings.
Analysts have predicted that the market's choppy trading of the past two months is likely to continue until investors feel more secure about the global economy. The Dow has had 24 triple-digit moves in the 35 trading days since it reached a 2010 high of 11,205.03 on April 26.
The Dow rose 213.88, or 2.1 percent, to 10,404.77. The broader Standard & Poor's 500 index rose 25.60, or 2.4 percent, to 1,115.23,
The Standard & Poor's 500 index moved above its average close of the past 200 days, 1,108. The 200-day moving average is a technical level watched by many traders. Pushing above that is seen as a sign of strength in the market. Gains in stocks faded Monday in part after the S&P 500 index failed to top the mark.
The tech-dominated Nasdaq composite index rose 61.92, or 2.8 percent, to 2,305.88.
Bond prices fell and drove up interest rates after stocks climbed. The yield on the benchmark 10-year Treasury note rose to 3.31 percent from 3.26 percent late Monday.
Andrew Neale, head of portfolio management at Fogel Neale Partners in New York, is skeptical that the market's climb will hold. He noted that many individual investors are growing weary of the market's sharp swings and are pulling money out of mutual funds and other investments. That means the gains are being driven largely by professional traders.
"We don't see any real retail buying," Neale said, referring to individual investors. "We're advising our clients to be very cautious with the market."
Boeing climbed $2.66, or 4.1 percent, to $67.48 and Illinois Tool rose $1.13, or 2.5 percent, to $46.78.
Microsoft Corp. rose $1.09, or 4.3 percent, to $26.58. Hewlett Packard rose $1.10 to $47.98.
Best Buy's fiscal first-quarter net income and revenue fell short of analysts' expectations but the company reiterated its fiscal 2011 forecast. The report brought concerns that consumers will cut spending and hurt a U.S. recovery. Best Buy fell $2.49, or 6.1 percent, to $38.56.
Shares of BP PLC rose 73 cents, or 2.4 percent, to $31.40 after falling 10 percent Monday when concerns grew about stepped-up political pressure in the U.S. to set aside money for costs related to the Gulf of Mexico oil spill that began April 20 when a rig operated by BP exploded. On Tuesday, credit ratings agency Fitch cut its rating on the oil company's debt. Fitch cited concerns about rising costs tied to the spill.
Commodities rose as investors were again tempted by investments seen as riskier. The prospect of a stronger global economy also lifted demand for metals and energy. Benchmark crude for July delivery rose $1.82 to settle at $76.94 a barrel on the New York Mercantile Exchange. Copper for July delivery rose 1.25 cents, or 0.42 percent, to settle at $3.0045 a pound.
The Russell 2000 index of smaller companies rose 16.50, or 2.5 percent, to 668.77.
Six stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.16 billion shares.
Britain's FTSE 100 climbed 0.3 percent, Germany's DAX index rose 0.8 percent, and France's CAC-40 rose 1 percent. Japan's Nikkei stock average finished up 0.1 percent.