The Standard & Poor's 500 and the Dow industrials rose Tuesday - extending the biggest December rally since 1991 for the S&P, as commodity producers gained on higher prices for energy and metals amid signs of growing global demand.
Chevron Corp. and Newmont Mining Corp. paced gains that sent producers of energy and raw materials to the biggest increase among 10 groups in the S&P 500.
General Motors Co. rallied 2.1 percent after analysts at banks including JPMorgan Chase & Co. and Morgan Stanley advised buying the shares.
The Standard & Poor's 500 Index increased 0.98, or 0.1 percent, to 1,258.51 after drifting between gains and losses earlier. The index is up 6.6 percent this month.
The Dow Jones industrial average climbed 20.51 points, or 0.2 percent, to 11,575.54, its highest since Aug. 28, 2008. But Nasdaq fell 4.39, or 0.2 percent, to 2,662.88.
Treasuries slid, sending the 10-year yield up 15 basis points to 3.48 percent for its biggest gain in two weeks, after demand weakened at a U.S. debt auction.
"Portfolio managers are playing a bit of a game of not wanting to be so light on stocks and heavy bonds at the end of the year," said James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $340 billion. "The 12/31 print of net results are going to be that stocks beat bonds, so they're buying stocks and selling bonds."
The S&P 500 has rallied 13 percent in 2010, rising above its close of 1,251.70 on Sept. 12, 2008, the last trading session before Lehman Bros. Holdings Inc. filed the world's biggest bankruptcy and prompted a 46 percent drop for the stock index through March 2009.
The measure has advanced 20 percent since Federal Reserve Chairman Ben S. Bernanke suggested on Aug. 27 that he was prepared to purchase bonds to spur economic growth, a second round of quantitative easing that the central bank eventually announced in November.
Benchmark market indexes fluctuated earlier in the day as reports on retail sales, consumer confidence, and home prices presented a mixed picture of the outlook for the world's largest economy.
About 559 million shares changed hands, about half the usual volume on Wall Street. Trading is expected to be light for most of the week as many investors have already closed their books for the year.
Falling shares narrowly outpaced rising ones on the New York Stock Exchange.
Energy and materials companies were posting gains as the price of crude oil gained. Chevron Corp. led Dow gainers, rising 1.2 percent to finish at $91.19. American Express Co. had the largest fall, losing 0.6 percent to $42.79.
The dollar slid to a seven-week low vs. the Japanese yen Tuesday.