Nasdaq, S&P at new 1-1/2 year highs

NEW YORK (CNNMoney.com) -- Financial shares rose in an otherwise tepid session Tuesday that nonetheless saw two of the major indexes -- the Nasdaq and the S&P -- finish at their highest levels in more than a year and a-half.

The S&P 500 index (SPX) added 2 points, or 0.2%, closing at its highest point since Sept. 26, 2008, when it topped 1,200. The Nasdaq composite (COMP) rose 7 points, or 0.3%, ending at its highest point since Aug. 15, 2008.

The Dow Jones industrial average (INDU) lost a few points, after having risen as high as 10,987.38 earlier. The Dow ended the previous session at 10,973.55, the highest finish since Sept. 26, 2008, when it closed at 11,143.13.

Stocks drifted in the morning, but found a little momentum in the afternoon as bank shares bounced and investors digested the minutes from the last Federal Reserve meeting.

Credit Suisse First Boston reportedly made some bullish comments on SunTrust Banks (STI, Fortune 500) and Regions Financial (RF, Fortune 500), giving those stocks a lift. But the broader banking sector was also on the rise, with the KBW Bank (BKX) index up 2.4%.

Stocks advanced Monday following the three-day Easter weekend, with investors responding favorably to the previous week's jobs report, a strong housing market report and the launch of Apple's iPad device. But there was less on the docket Tuesday and stocks struggled through most of the session.

Investors were also keeping an eye on the Treasury market, a day after the 10-year note yield surged to 4%, the highest level in 18 months. Prices have been sliding and yields rising recently as investors have sought riskier assets amid bets on a bigger recovery.

Also in focus: Oil prices, which surged to nearly 18-month highs Tuesday.

In a quiet week for news, reports are due Wednesday on consumer credit, Thursday on jobless claims and Friday on wholesale inventories.

Fed minutes: Information reviewed by central bankers at the March 16 Fed policy-setting meeting showed that the economy continues to improve at a moderate pace and the labor market is stabilizing. Higher energy prices have boosted overall consumer price inflation, but prices excluding food and energy were little moved.

On the downside, the recovery could lose momentum amid the still-sluggish housing market and impact from weaker spending at the state and local government level.

At the March 16 meeting, central bankers voted to hold a key short-term interest rate at historic lows near zero and said rates will stay exceptionally low for the foreseeable future.

Company news: Massey Energy (MEE) shares plunged 11.4% after the company confirmed 25 workers were killed after an explosion at one of its coal mines in West Virginia.

Federal regulators are pushing for a $16.4 million fine against Toyota Motor (TM) for deliberately hiding accelerator problems from officials for months.

The fine is the maximum allowed under the law and follows the recall of more than eight million vehicles due to gas pedal and sudden acceleration problems. Toyota shares were barely lower.

AT&T (T, Fortune 500) said it will invest an additional $1 billion to upgrade its business network and improve services and products for customers. Shares were little changed.

Business software maker CA (CA) said full-year profit would hit the low end of its previous forecast and that it would cut about 1,000 jobs. Shares lost 1.9%.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.97% from 3.99% late Monday. The 10-year had risen as high as 4% Monday, an 18-month high. Treasury prices and yields move in opposite directions.

Treasury sold $40 billion of 3-year notes Tuesday in the second of four auctions scheduled for this week geared toward selling $82 billion in debt. The sale received more than 3 times the bids than the amount sold, a signal of solid demand. Monday's sale of $8 billion in 10-year Treasury Inflation Protected Securities (TIPS) also saw a strong response.

The dollar and commodities: The dollar gained versus the euro and fell against the yen.

COMEX gold for June delivery rose $2.20 to settle at $1,136 per ounce.

U.S. light crude oil for May delivery rose 22 cents to settle at $82.86 a barrel on the New York Mercantile Exchange, the highest point for crude since October 2008.

World markets: In overseas trading, European markets rallied Tuesday after resuming trading following a long Easter holiday weekend. Asian markets ended mixed, with the Hong Kong Hang Seng rising and the Japanese Nikkei falling.

Market breadth was mixed. On the New York Stock Exchange, winners topped losers by eight to seven on volume of 940 million shares. On the Nasdaq, advancers beat decliners seven to six on volume of 2.12 billion shares.