Rebound in commodities carries stocks higher

NEW YORK — A rebound in commodities is drawing investors back into the stock market.

Major stock indicators rose at least 0.5 percent in early afternoon trading Tuesday, including the Dow Jones industrials, which gained 61 points, recovering all of the prior day's losses.

In a reversal of Monday's pattern, the dollar weakened against other major currencies and commodities like oil and gold bounded higher, lifting energy and material stocks.

The gains in stocks and commodities came as the Federal Reserve began a two-day meeting on interest rates. Investors are hoping the Fed will provide a clearer indication of when it may raise interest rates when it issues a statement at the conclusion of a two-day meeting on Wednesday. The Fed is widely expected to keep rates at their record low of near zero for the time being. Rock-bottom interest rates have helped fuel the market's nearly seven-month old rally, making cash plentiful and cheap and encouraging investors to buy up riskier assets.

The market appears to be following a well-established pattern where brief selloffs are met with more buying as investors fear missing out on a continued rally.

"Reluctantly, investors are continually being dragged into a market that is finding a path of least resistance to the upside," said Art Hogan, chief market analyst at Jefferies & Co.

The consensus on Wall Street is that the economy is healing despite ongoing challenges like unemployment. But investors still have doubts over how strong the recovery will be, and whether the stock market's more than 50 percent move off of 12-year lows in March accurately reflects such a strong recovery.

"Right now, it's a more orderly market," said Greg Reynholds, senior vice president of asset management at Lenox Advisors. "People are digesting the data, trying to figure out exactly where we're headed."

The Dow Jones industrial average rose 61.14, or 0.6 percent, to 9,840.00. The Standard & Poor's 500 index gained 8.71, or 0.8 percent, to 1,073.37, while the Nasdaq composite index rose 11.31, or 0.5 percent, to 2,149.35.

About three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 600.7 million shares, compared with 596.9 million shares traded at the same time the day before.

In other trading, the Russell 2000 index of smaller companies rose 5.25, or 0.9 percent, to 621.22.

Gold and silver prices rose after three days of declines, while oil prices gained $1.69 to $71.40 a barrel on the New York Mercantile Exchange.