The mere discussion of more economic stimulus from the Federal Reserve was enough to send stocks higher Tuesday.
The Dow Jones industrial average rose 20 points, its third straight session of gains.
Minutes from the Fed's latest policy meeting on Aug. 9 showed that central bank officials discussed a variety of options to bolster the economy, including buying more Treasury bonds. In the end, they decided to keep interest rates low until at least mid-2013.
The news that more aggressive action was being considered gave investors a reason to buy stocks. "They want to see stimulus, and they hope stocks will go higher," said Joseph Saluzzi, co-head of stock trading at Themis Trading.
The Federal Reserve has purchased Treasury bonds twice in the past as a way to keep long-term interest rates low. The Fed's first bond-buying program was in 2008, at the height of the financial crisis. The second, announced last August, helped to push the Dow up 28 percent through April 29. Lower interest rates on bonds give investors an incentive to move money out of bonds and into stocks and other assets.
The Dow rose 20.70 points, or 0.18 percent, to close at 11,559.95. It was down as many as 109 points five minutes after the consumer confidence report came out at 10 a.m. It traded mixed for most of the day and turned higher in the last hour of trading. The Dow has risen for three days straight, and six out of the last seven.
Boeing Co. rose 2.2 percent, the most of the 30 companies in the Dow, after the aircraft maker said its board gave approval to build a version of its workhorse 737 jet with a redesigned engine. That should help it compete better with rival Airbus.
The Standard & Poor's 500 index rose 2.84 points, or 0.23 percent, to 1,212.92. The Nasdaq composite index rose 14, or 0.55 percent, to 2,576.11.
Companies that rely most heavily on consumer spending had some of the biggest losses. Retailers Kohl's Corp. and Lowe's Cos. each fell 2.2 percent. Best Buy Co. Inc. fell 0.8 percent. Retailers are in the midst of the back-to-school shopping season, which can account for up to 25 percent of annual revenue.
Trading volume was lower than usual, worrisome because it suggests relatively few investors are driving market gains or losses. That creates risk for bigger price swings.