Stocks Rally as Markets Await Fed Decision; Soft Commodities, Homebuilders Shoot Higher

June 19, 2012 2:05 PM EDT
SPDR S&P 500 ETF (NYSE: SPY) is trading higher Tuesday amid strong gains in financials, housing, and commodities. The Dow Jones Industrial Average is up 146 points to 12,888, the Nasdaq is up nearly 42 points, and the S&P 500 is 17 points higher.

Optimism in equities suggests investors are betting the FOMC will hint at further easing measures with its rate decision due out on Wednesday. In addition to US inflation data which has been below the Fed's targets, recent indications by the Bank of England and UK Treasury they will not stand idle while mainland Europe struggles could mean a response from the FOMC is coming.

Financials are being supported by shares of Bank of America (NYSE: BAC) as the bank is said to be in talks with Julius Baer regarding a $2 billion deal involving the sale of its non-U.S. Wealth Management unit. Elsewhere in the sector, JPMorgan's (NYSE: JPM) Jamie Dimon is deflecting questions from House members related to the bank's large CIO loss.

Homebuilding stocks are also trading higher as building permits climbed to the highest level since 2008.

Market Vectors Agribusiness ETF (NYSE: MOO) and PowerShares DB Agriculture ETF (NYSE: DBA) are higher this afternoon as soft commodity futures were pushed higher, led by cotton. Cotton has seen strong demand from textile companies in India and China. According to a WSJ article from Monday, a late-season sale of U.S. cotton to China earlier this month recently sent shockwaves through the market. The purchase, totaling 795,000 bales, caused a cascade of short covering.

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