Stocks open higher amid central bank hope

Stocks moved higher Tuesday, putting the S&P 500 on pace for its fourth straight gain on increased hopes for central bank stimulus measures ahead of the Federal Reserve's policy meeting.

The Federal Open Market Committee begins the first day of a two-day meeting on interest rate policy, with expectations increasing that the U.S. central bank may extend its "Operation Twist" program, its effort to drive down long-term borrowing costs.

"It's a little bit of anticipation ahead of the Fed meeting," said Fred Dickson, chief market strategist at D.A. Davidson & Co. of Lake Oswego, Oregon.

"To look at it, I would say 90 percent of it is Fed action, a little bit is maybe progress in Greece toward forming their government and a successful Spanish auction but at high yields."

Related: Slowing economy could force Fed to take action

Spain's short-term borrowing costs rose to their highest level since 1997 after it raised 3 billion euros at a short-term debt sale, and yields on its 10-year bond remained above the troublesome 7 percent mark, which has resulted in a bailout for other countries.

In Greece, political leaders raced to build a coalition government led by conservative New Democracy leader Antonis Samaras, that would seek to renegotiate the terms of Greece's 130 billion euro EU/IMF bailout agreement.

German analyst and investor sentiment dropped in June at its fastest rate since October 1998, indicating the euro zone's strongest economy may be vulnerable to the effects of the region's debt crisis.

The Group of 20 leading and emerging economies will "take the necessary actions" to strengthen the global economy, and if growth weakens substantially, countries without heavy debt loads stand ready to stimulate their economies, according to a draft communique from the G20 summit.

Shares of Oracle Corp rose after it reported stronger-than-expected quarterly profit after the bell on Monday, releasing the results three days ahead of schedule after news of the pending departure of a senior sales executive fueled concerns that business was stagnating.

Julius Baer is in talks with Bank of America about buying Merrill Lynch's non-U.S. wealth management unit, reported to be worth up to $2 billion and which would see the acquisition-hungry Swiss private bank land another big deal. Bank of America shares gained on the news.

Walgreen Co tumbled after the pharmacy chain reported quarterly earnings and said it would buy a 45 percent stake in KKR & Co -backed Alliance Boots for $6.7 billion in a cash and stock deal.

FedEx Corp slipped after the package delivery company reported fourth-quarter earnings and provided an outlook for the first-quarter and 2013.

Economic data showed U.S. housing starts fell 4.8 percent in May but permits to build rose to the highest level in over three years, as the housing market continues to struggle to return to health.

Reuters contributed to this report.

Greg Ip, The Economist US economics editor, and Mark Olson, Treliant Risk Advisors co-chairman, discuss today's Fed meeting and whether some form of easing will be issued due to softening economic conditions.

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