NEW YORK (TheStreet) -- U.S. stocks surged Tuesday as investors focused on the possibility of more monetary stimulus from the Federal Reserve, looking past ongoing questions about the stability of the eurozone.

Hopes that the central bank could come across with another round of quantitative easing were stoked by comments from Charles Evans, the president of the Federal Reserve Bank of Chicago, who was quoted as saying he's in favor of "pretty much any accommodative policy."

The major U.S. equity indices all managed to finish just below their session highs despite anxiety about Greece's general elections, which will take place this coming weekend. In addition, Spanish 10-year bond yields reportedly reached 6.85%, the highest level on record, earlier in the day as global investors remain unimpressed with the $125 billion bailout plan for the country's banking system.

The Dow Jones Industrial Average jumped 163 points, or 1.31%, at 12,574. The blue-chip index wiped out Monday's losses, which snapped a four-day winning streak.

The S&P 500 gained more than 15 points, or 1.17%, to finish at 1324, and the Nasdaq leapt 33 points, or 1.19%, to settle at 2843.

Within the Dow, 29 of 30 components finished higher, led by American Express ( AXP), Bank of America ( BAC), Boeing ( BA) and DuPont ( DD).

Boeing rose more than 3.5% after Bernstein Research lifted its rating on the plane maker to outperform with a $92 target price (up from $85), saying concerns about 787 deliveries are "overdone" and that the valuation is attractive at current levels.

"An important caveat to our upgrade is that we remain well below consensus in our EPS estimates for 2012 and 2013, which suggests future negative revisions," the firm noted. "But, there is no historical correlation between Boeing's share price and earnings revisions. We believe that the value in Boeing's stock comes from the long term outlook, not from short term earnings."

The only blue chip on the downside was United Technologies ( UTX), which lost 0.36%.

The strongest sectors were energy, basic materials, capital goods and conglomerates.

The market will be mulling over the Greek elections throughout the week, a scenario that constitutes a recipe for volatility, given how difficult it is to assess popular opinion in the country right now.

The FTSE in London closed ahead by 0.8% and the DAX in Germany added 0.3%.

The benchmark 10-year Treasury fell 22/32, raising the yield to 1.665%. The dollar was off by 0.35%, according to the dollar index.

On the economic front, the National Federation of Independent Business said its small-business optimism index dipped 0.1 points in May to 94.4. The reading was above a consensus view of 94.5, according to Ian Shepherdson, chief U.S. economist at High Frequency Economics.

"This is a great relief to us; the sales and economic expectations components of the survey are sensitive to stock prices so we feared a significant decline," he wrote. "The danger is not over yet, given the variability of the links between movements in stock prices and the survey, but so far the damage is slight ... Overall, small firm recovery continues, fitfully."

Also, the Bureau of Labor Statistics reported that U.S. import prices fell 1% in May, as expected, after no change the previous month. Lower fuel and non-fuel prices contributed to the May decrease in overall import prices. Export prices also declined in May, falling 0.4% after a 0.4% increase in April.

"Overall, a modest read on inflation pressure -- keeping with the trend as energy prices continue to decline," said Ian Lyngen senior bond strategist at CRT Capital.

The Treasury Department's budget report found the May federal budget ran a deficit at $124.6 billion, which was higher against a $57.6 billion deficit during the same period a year ago.

Hong Kong's Hang Seng index settled down 0.4% on Tuesday and the Nikkei in Japan shed 1%.

July crude oil futures added 78 cents to settle at $83.48 a barrel. August gold settled up $17 at $1,613.80 an ounce.

In corporate news, FactSet Research ( FDS) reported third-quarter net income Tuesday of $48 million, or $1.05 a share, up from year-earlier earnings of $43.3 million, or 92 cents a share. On average, analysts anticipated third-quarter earnings of $1.04 a share. The company anticipates fourth-quarter non-GAAP earnings per share of between $1.15 and $1.17. Analysts, on average, forecast earnings of $1.08 a share. Shares tumbled more than 12%.

Texas Instruments ( TXN) raised the low end of its second-quarter revenue and earnings estimates after Monday's closing bell. The company now sees earnings of 32 to 36 cents a share in the June-ending period on revenue ranging from $3.28 billion to $3.42 billion. The current estimate of analysts polled by Thomson Reuters is for a profit of 41 cents a share on revenue of $3.35 billion in the quarter. The stock added 2%.

Seagate Technology ( STX), the hard drive maker, saw its shares rise 2% after David Einhorn of Greenlight Capital disclosed ownership of more than 23 million shares, or a 5.4% stake, in the company. That's an increase from the 14.5 million shares, or 3.4% stake, that Einhorn disclosed as of March 31. Shares closed up 2.8%.

Juniper Networks ( JNPR), the networking equipment maker, announced a new $1 billion buyback authorization. The stock gained 1.3%.

Another big mover was Zynga ( ZNGA), which dropped 10% with volume exceeding 55 million, close to three times the issue's trailing three-month daily average churn.

The stock fell below $5 for the first time ever with trading triggering a short-sale circuit breaker. The driver was believed to be an analyst report from Cowen saying the company's daily active user activity fell 8.2% last month.


-- Written by Andrea Tse and Joe Deaux in New York.

>To contact the writer of this article, click here: Andrea Tse.

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