U.S. stocks rose, erasing earlier losses, after Federal ReserveBank of St. Louis President James Bullard said the central bankshould continue its bond buying to boost growth that is slower thanexpected.

The Standard & Poor's 500 Index gained 0.5 percent to anall-time high of 1,673.96 at 2:26 p.m. in New York, after fallingas much as 0.2 percent earlier. The Dow Jones Industrial Averageadded 87.37 points, or 0.6 percent, to 15,422.65. Trading inS&P 500 stocks was 3.1 percent below the 30-day average duringthis time of day.

“We have a long stretch now with no significant decline, and Ithink that's going to continue until there is some significantconcern about the Fed stopping,” Jason Thomas, chief investmentofficer of Los Angeles-based Aspiriant, said in a phone interview.Aspiriant is an independent wealth management firm with over $7billion in assets under management.

The Fed purchases known as quantitative easing should bemaintained because financial markets indicate that they areimproving financial conditions and can be adjusted based on how theeconomy changes, Bullard, who votes on the policy-setting FederalOpen Market Committee this year, said today according to the textof remarks prepared for delivery in Frankfurt.

Fed Bank of New York President William C. Dudley said inprepared remarks for a speech today in New York that he has notdecided whether the Fed's next move should be to enlarge or toshrink its bond buying program.

The central bank's chairman, Ben S. Bernanke, testifies on theoutlook for the U.S. economy before the Joint Economic Committee ofCongress tomorrow. The FOMC also releases the minutes of its April30-May 1 meeting tomorrow. Policy makers said after their lastmeeting that they will keep buying $85 billion of bonds everymonth, while standing ready to raise or lower purchases asconditions evolve.

Some policy makers in recent months have signaled they favorscaling back the quantitative-easing program in the next fewmonths. Stocks erased gains yesterday after Fed Bank of ChicagoPresident Charles Evans said the U.S. economy has improved “quite alot” as the central bank maintains record stimulus. The questionnow is “how much confidence we have that the improvements that havebeen made will continue and be sustained,” said Evans, who holds avote on the FOMC this year.

'Fairly Benign'

“I view a move by the Fed toward normalizing monetary policy asultimately a good thing,” Liz Ann Sonders, chief investmentstrategist at Charles Schwab Corp., said on Bloomberg Television.Her firm has $2 trillion in client assets. “It will be a taper;they're not going to grind this to a halt all of a sudden. If thereason is that economic growth has picked up with inflationexpectations still fairly benign, then that's the best reason forthe Fed to do it.”

The S&P 500 has surged 146 percent from its 12-year low in2009, driven by better-than-estimated corporate earnings and threerounds of bond purchases from the Fed.

Goldman Sachs Group Inc. said the U.S. stock-market rally maylast at least another 2 1/2 years and send the S&P 500 up 26percent to 2,100. David Kostin, the bank's New York-based chiefU.S. equity strategist, raised forecasts for the U.S. equitybenchmark, predicting it will finish 2013 at 1,750 and 2014 at1,900 as stock valuations increase, according to a research reportdated yesterday. The S&P 500 trades at 16.3 times reportedoperating profit, 16 percent below the average since 1998, datacompiled by Bloomberg show.

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