Wall Street at 5-month high

NEW YORK (Reuters) - Stocks climbed to a five-month high on Tuesday,
led by materials stocks after an upbeat forecast by aluminum company
Alcoa and strong gains in bank shares.
Alcoa Inc
posted revenue that topped expectations late Monday and gave a bullish
outlook for the aluminum industry. The stock gave up early gains to end
at $9.44, up 1 cent. However, data showing strong Chinese imports of
copper helped buoy the rest of the sector.
A gauge of materials companies' shares was among the leaders of S&P 500 sectors, with a gain of 1.8 percent.
The
U.S. equity market continued its recent divergence from the woes of the
euro zone. Recent economic reports and optimism about the U.S. earnings
season have pushed stocks higher in the start of the new year, with the
benchmark S&P 500 rising in five of six sessions.
"Investors are still focusing on Europe but not putting as much weight on Europe as they were in November," said Jonathan Corpina, head of NYSE floor operations for Meridian Equity Partners in New York.
That
focus could change quickly. Key bond auctions later this week from
Italy and Spain, two countries at the center of the euro zone crisis,
could hurt sentiment if they go poorly.
"Historically, earnings
season has helped the market shift higher - so let's hang our hats on
this for now, but let's not forget about what is going on in Europe,"
Corpina said.
Industrial and materials stocks, closely tied to economic performance, were the day's biggest gainers. Caterpillar Inc shares were up 3 percent at $99.96, leading the Dow index higher.
U.S.
bank stocks continued a rebound that has lifted the KBW banks index
<.BKX> nearly 9 percent so far this year. The KBW rose 1.9 percent
on Tuesday.
JPMorgan Chase rose 2.1 percent to $36.05.
Easing
some concerns about Europe, Fitch said it does not expect to cut
France's AAA credit rating this year, but countries under review such as
Italy or Spain could be downgraded by one or two notches.
The Dow Jones industrial average <.DJI> gained 69.78 points, or 0.56 percent, to 12,462.47. The Standard & Poor's
500 Index <.SPX> rose 11.38 points, or 0.89 percent, to 1,292.08.
The Nasdaq Composite Index <.IXIC> climbed 25.94 points, or 0.97
percent, to 2,702.50.
The Dow and S&P 500 hit their highest
intraday levels in five months. The S&P 500 close above 1,285.09 is
the highest since the end of July and marked a breach of technical
resistance, which could spur further gains.
Copper prices rose
3.1 percent, the best performance since late November, after China
reported copper imports rose to a record high last month.
The
CBOE Volatility Index VIX <.VIX>, Wall Street's so-called fear
gauge, fell 2.9 percent to 20.46, making another test of the
psychologically key 20 level, according to WhatsTrading.com options
strategist Frederic Ruffy.
The VIX is down 11.6 percent so far in
2012 and falling to levels last seen in late July as the S&P 500
has seen average daily price moves of fewer than 8 points so far this
year, he said.
Volume was solid, with about 7.02 billion shares
traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the
daily average of 6.7 billion.
Advancing stocks outnumbered
declining ones on the NYSE by 2,305 to 687, while on the Nasdaq,
advancers beat decliners 1,833 to 699.