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US stocks rally for a third day on stimulus hopes

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US stocks have rallied for a third straight day, buoyed by hopes for more stimulus from the Federal Reserve and the European Central Bank to boost weak economies.

The Dow Jones Industrial Average finished up 51.09 points, or 0.39 per cent, at 13,168.60.

The S&P 500-stock index rose 7.12 (0.51 per cent) to 1,401.35, while the tech-rich Nasdaq gained 25.95 (0.87 per cent) at 3,015.86, pushing both indices above the key levels of 1,400 and 3,000, respectively.

Stocks were driven higher “as investors speculate on upcoming stimulus measures from the ECB,” Wells Fargo Advisors analysts said.

“Further Fed action was also a positive catalyst after Regional President Eric Rosengren reiterated his stance to expand monetary policy.”

The sole economic indicator of the day, the Federal Reserve’s June consumer credit report, showed credit growth rose 3.0 per cent from May, the weakest pace since October 2011.

“Though the slowdown in credit balance growth was larger than expected, it is not too surprising given consumers’ subdued confidence and weak income growth,” said Timothy Daigle at Moody’s Analytics.

Energy, financial and industrial stocks benefited from the expectations of further stimulus.

Amid a sharp rise in crude oil prices, Dow energy heavyweights Chevron and ExxonMobil were up 0.6 per cent and 0.5 per cent, respectively.

Fellow Dow member American Express added almost 1.0 per cent, Bank of America added 0.4 per cent, Caterpillar gained 1.0 per cent and Boeing climbed 2.2 per cent.

The blue-chip index’s worst performer was Pfizer, down 2.1 per cent, after the drugmaker and Johnson & Johnson announced they were ending trials of an Alzheimer’s disease treatment. J&J fell 0.8 per cent.

Drugstore chain CVS Caremark fell 1.7 per cent after posting better-than-expected earnings in the second quarter, but revenues disappointed.

Do-it-yourself retailer Home Depot rose 0.8 per cent after revealing it was buying US Home Systems, a kitchen and bath products and services firm, in a $93.4 million cash deal. USHS soared 38.3 per cent to $12.53.

Bond prices fell. The 10-year Treasury yield rose to 1.63 per cent from 1.56 per cent Monday, while the 30-year increased to 2.72 per cent from 2.65 per cent. Bond yields move inversely to prices.