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Stocks Gain as Traders Shrug at Possible Fed Pullback

NEW YORK ( TheStreet) -- Major U.S. stock markets jumped Tuesday as hedge fund manager David Tepper's bullish comments about stocks offset worries about the Federal Reserve's scaling back on monetary stimulus.

The S&P 500 was up 1% to 1,650.34.

Tepper, the head of Appaloosa Management, praised the U.S. bank sector and sent Bank of America (BAC ) up 2.8% to $13.34 while Citigroup (C ) gained 2.4% to $50.09.

"They call it the Tepper-effect ... endorsing this market move higher, but also you had the National Federation of Independent Business survey come out and ... it was the highest level in six months,"said Quincy Krosby, market strategist at Prudential Financial. "The Fed obviously has to think about an exit strategy ... but fears have been assuaged regarding the Fed's motives."

The Dow Jones Industrial Average was up 0.8% to 15,215.25 while the Nasdaq was up 0.7% to 3,462.61.

The NFIB reported Tuesday that its small business confidence index in April jumped to 92.1 from the prior week's 89.5, which proved to be another positive economic indicator from last month.

Philadelphia Fed President Charles Plosser, speaking at the Center for Business and Policy Studies in Stockholm, said that the U.S. central bank should scale back its bond-buying.

"I believe that labor market conditions warrant scaling back the pace of purchases as soon as our next meeting," said Plosser in prepared remarks. "Moreover, unless we see a significant reversal in current trends that jeopardizes my forecast of near 7% unemployment rate by the end of this year, then I anticipate that we could end the program before year-end."

Tepper took a different view of Fed bond-buying, saying that concerns the bank will wind-down its bond-buying were overstated.

"If the Fed doesn't taper back, we're going to get into this hyper-drive market," Tepper said. "It's a backwards argument. To keep the markets going up at a steady pace the Fed has to taper back."

"I'm definitely bullish," he added. "I'm still a bull in this country ... guys that are short, they better have a shovel to get themselves out of the grave."

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