Wall Street at 5 Month High

NEW YORK (Reuters) – Stocks climbed to a five-month high on Tuesday, led by materials stocks after an upbeat forecast by aluminum company Alcoa and strong gains in bank shares.

Alcoa Inc posted revenue that topped expectations late Monday and gave a bullish outlook for the aluminum industry. The stock gave up early gains to end at $9.44, up 1 cent. However, data showing strong Chinese imports of copper helped buoy the rest of the sector.

A gauge of materials companies’ shares <.GSPM> was among the leaders of S&P 500 sectors, with a gain of 1.8 percent.

The U.S. equity market continued its recent divergence from the woes of the euro zone. Recent economic reports and optimism about the U.S. earnings season have pushed stocks higher in the start of the new year, with the benchmark S&P 500 rising in five of six sessions.

“Investors are still focusing on Europe but not putting as much weight on Europe as they were in November,” said Jonathan Corpina, head of NYSE floor operations for Meridian Equity Partners in New York.

That focus could change quickly. Key bond auctions later this week from Italy and Spain, two countries at the center of the euro zone crisis, could hurt sentiment if they go poorly.

“Historically, earnings season has helped the market shift higher – so let’s hang our hats on this for now, but let’s not forget about what is going on in Europe,” Corpina said.

Industrial and materials stocks, closely tied to economic performance, were the day’s biggest gainers. Caterpillar Inc shares were up 3 percent at $99.96, leading the Dow index higher.

U.S. bank stocks continued a rebound that has lifted the KBW banks index <.BKX> nearly 9 percent so far this year. The KBW rose 1.9 percent on Tuesday.

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