By PETER A. MCKAY and DONNA KARDOS YESALAVICH
Stocks pushed higher Tuesday on the backs of financial, energy and materials shares, as investors went back to betting on a global recovery after a slight pullback Monday.
The Dow Jones Industrial Average was recently up 47 points, or 0.5%, trading around 9826, helped by a gain of 3.6% for J.P. Morgan Chase and 2.9% for Caterpillar.
The Nasdaq Composite Index gained 0.4%. The S&P 500 added 0.6% as its financial sector jumped 2.2%, while its energy and materials categories each increased more than 1%.
![[Markets Data]](http://s.wsj.net/public/resources/images/MDGpromo_D01222009151210.jpg)
Among the biggest winners in the financial sector on Tuesday were bond and mortgage insurers. MBIA leapt 24% and rival Ambac Financial Group posted a 18% gain. Troubled mortgage insurer Triad Guaranty rose 14%,MGIC Investment rose 7% and Radian Groupwas up 5%.
The insurers that rose the most generally had substantial short-seller interest, suggesting that the recent price rise for the group may have put some pressure on short-sellers to cover their positions.
Further helping stocks, especially energy companies, oil futures closed up $1.84 to reclaim their perch above $71 a barrel, with some traders placing early bets ahead of inventory data due out Wednesday.
Art Hogan, chief market analyst at Jefferies & Co. in Boston, said the stock market seems to be taking its cues from commodities on Tuesday, not the other way around.
"The economic data we've seen lately have been OK, as far as the stock market is concerned," said Mr. Hogan. "But they're not a major plus or minus. Really, there aren't a lot of catalysts out there except for what's happening with the dollar and commodities."
The gains came as the Federal Reserve began a two-day meeting on interest rates. While investors will look for hints about possible tightening by the central bank in its policy statement Wednesday, the consensus is that no move is imminent. Confidence that the Fed and many of its overseas counterparts will keep rates low has fueled a steady stock rally this month.
Low interest rates effectively increase the supply of money in the global economy. That dynamic helped to weigh on the dollar Tuesday, which in turn boosted the prices of commodities traded globally in dollar terms.
The euro hit a fresh 2009 high, topping $1.48 for the first time this year. The greenback was weaker against every other major currency in recent action.
Currency analyst Joe Trevisani of FX Solutions in Saddle River, N.J., said the dollar's slide could continue and take the euro past $1.50 in short order, fueled in part by an increasing trend in which speculators are using the dollar as a low-interest vehicle to fund "carry" trades in higher-yielding investments.
"There's no sense in the [currency] market that there will be a change in Fed policy," which could quickly make carry trades unprofitable, Mr. Trevisani said. "The stock market is signaling that we'll have a recovery in six months, but we're seeing some real doubts about that coming in elsewhere."
Gold, a traditional investor safe haven, gained $12.50 to settle at $1,014.20 per ounce in New York, close to its exchange record of $1,018.90.
Treasurys stayed within their higher morning ranges following a well-received auction of two-year notes. The auction saw healthy demand with a bid-to-cover of 3.23, well above the 2.98 average of the last four auctions. The yield came in at 1.034%, in line with rates in the when-issued market just prior to the sale.
—Lavonne Kuykendall and Geoffrey Rogow contributed to this article
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