Stocks higher on hopes for China stimulus

The stock market is desperately looking for good news.

Tuesday oil prices fell, the euro sank to a 22-month low, and the yield on U.S. 10-year Treasury notes fell near a historic low after a report suggested Spain will have more trouble repaying its debts.

But stocks rose anyway, in one of their best days in a dreary month. Investors focused on hopes that China is poised to rev up its economic growth machine and that upcoming elections in Greece will help the country stay in the euro.

"The overriding news isn't that great," said Robert Pavlik, chief market strategist at investment advisers Banyan Partners. "But Greece and China are taking the pressure off the market in the short term."

Gains in industrial stocks that depend heavily on the Chinese economy, like Caterpillar and Alcoa, helped push the Dow Jones industrial average up 125.86 points to 12,580.69, only its fifth gain for the month. The index is headed for its first monthly loss since September.

Facebook plunged 10 percent to $28.84, shaving $25 billion off its market value.

The Standard & Poor's 500 index closed up 1.11 percent to 1,332.42; the Nasdaq composite rose 1.18 percent to 2,870.99. U.S. markets were closed Monday for Memorial Day.