U.S. stocks closed higher Tuesday, as investors felt optimistic that the Federal Reserve (Fed) may announce more stimulus measures when it concludes its final meeting of the year.
In U.S. news, the Fed will be deciding whether to continue Operation Twist, which is set to end this month. Expectations are high that the central bank will announce another round of bond buying in place of the program. Meanwhile, investors continued to wait for a resolution to fiscal cliff negotiations in Washington. The Census Bureau reported that the trade deficit widened to $42.2 billion in October. A separate report showed that wholesale inventories rose 0.6 percent in October, which was better than forecasts.
In international news, Italian Prime Minister Mario Monti unexpectedly announced plans over the weekend to step down once parliament passes a national budget later this month. German investor sentiment rose sharply in December. Greece is due to announce the results of a debt buyback later, triggering the disbursement of the next installment of its European Union-International Monetary Fund bailout funds.
In company news, the Treasury Department will sell the last of its shares in rescued insurer AIG for $32.50 a share, raising about $7.6 billion. The government has enjoyed a profit of $22.7 billion from its rescue of the company. HSBC said that it will pay $1.92 billion to resolve money-laundering allegations.
The dollar fell against the euro and the pound, but rose versus the yen. Light sweet crude oil for January delivery gained 23 cents to $85.79 a barrel on the New York Mercantile Exchange. Gold futures lost $4.80 to $1,708.20.
The Dow Jones industrial average gained 78.56, or 0.60 percent, to 13,248.44. The broader Standard & Poorâ€™s 500 index rose 9.29, or 0.65 percent, to 1,427.84. The technology-heavy Nasdaq composite index moved up 35.34, or 1.18 percent, to 3,022.30.