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U.S. stocks back in rally mode

28/05/2013 16:56
U.S. stocks rallied right out of the gate Tuesday, following a strong housing report.

The Dow Jones Industrial Average and the S&P 500 rose 1%. The Nasdaq gained 1.2%.

S&P/Case-Shiller reported that housing prices rose a better-than-expected 10.2% during the first quarter -- the strongest jump since 2007.

Investors were already feeling pretty optimistic as they returned from a three-day holiday weekend.

Dovish comments from central bankers in Japan and Europe sent global stocks rallying.

"Those gains in Europe and Asia are spilling over into the U.S. markets," said Peter Cardillo, chief market economist at Rockwell Global Capital.

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Bank of Japan board member Ryuzo Miyao said Tuesday that the central bank would continue to put downward pressure on rates, even if expectations for a Japanese economic recovery were putting upward pressure on rates.

Separately, European Central Bank Executive Board member Peter Praet said the ECB could still cut interest rates further if needed.

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"After last week's turbulence, these pledges of easy money will help alleviate some of the fears the Fed will have an early exit in the United States," said Cardillo.

Last week, U.S. stocks snapped a four-week winning streak, as the prospect of life without Federal Reserve aid sank in.

Asian markets closed firmer Tuesday, with the Nikkei and Shanghai Composite index both rising by 1.2%, while the Hang Seng jumped by 1.1%.

European markets jumped more than 1% in afternoon trading.

In corporate news, Tiffany & C (TIF)reported better-than-expected earnings but lowered its revenue outlook.

Valeant Pharmaceuticals said Monday it was buying eye care specialist Bausch & Lomb from private equity firm Warburg Pincus. U.S. shares of Valeant (VRX), Canada's largest drugmaker, rose 12%.

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Shares of the electric car maker Tesla (TSLA), backed by billionaire Elon Musk, rose more than 4%, topping $100.