NEW YORK Stocks rose broadly Tuesday on hopes that Europe was moving closer to resolving its debt crisis. The Dow Jones industrial average closed up 146 points as industrial and materials companies led the market higher.
Germanys chancellor Angela Merkel said her country would do whatever it could to help Greece regain investors confidence. Greeces finance minister also said that country would receive the next round of bailout loans in time to avoid a default. Greece was at risk of running out of money by mid-October if it did not receive the funds.
Europeans are finally starting to understand that they need to act with some force to get ahead of the European debt crisis, said John Briggs, a fixed-income strategist at RBS.
The Dow rose 146.83 points, or 1.3 percent, to close at 11,190.69. It had been up as many as 325 points earlier. The Dow has added 419 points over the last two days, making up more than half of its 737-point plunge last week.
The Standard & Poors 500 index rose 12.43, or 1.1 percent, to 1,175.38. Materials stocks led the S&P higher. Specialty metals company Allegheny Technologies Inc. rose 7.4 percent, the most in the index.
The Nasdaq composite rose 30.14, or 1.2 percent, to 2,546.83.
The gains were broad. Five stocks rose for every one that fell on the New York Stock Exchange. All 10 company groups that make up the S & P 500 index rose. Volume was slightly higher than average at 4.9 billion shares.
Small companies rose more than larger ones, a sign that investors were moving money into riskier investments. The Russell 2000 index, a benchmark for small-cap stocks, rose 2.2 percent.
European markets also closed sharply higher. Germanys DAX rose 5.3 percent, Frances CAC-40 5.7 percent. Britains FTSE 100 rose 4 percent.
The encouraging signs from Europe also sent commodities prices higher. Investors fear that a blowup in Europes debt crisis could drag down economic growth across the globe. That would reduce demand for raw materials such as crude oil and copper.
Oil soared 5.3 percent, copper 4.8 percent. That helped the stocks of energy producers and mining companies. Freeport-McMoRan Copper & Gold Inc. rose 3.1 percent and Exxon Mobil Corp. rose 1.7 percent. Gold rose 3.6 percent, its first gain in a week.
Analysts cautioned that even a small dose of bad news from Europe or the U.S. economy could push stocks right back down again.
This is a news, rumor-driven rally, said Ryan Detrick, senior technical strategist at Schaeffers Investment Research in Cincinnati. This is still a very, very risky market.
That was evident late in the day when the Financial Times reported that a split had emerged among European leaders over the bailout terms for Greeces debt. The Dow had been up nearly 300 points shortly before the FT published the report on its website at 2:48 Eastern. Within an hour, those gains faded and the Dow closed up 147 points.