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Markets climb, led by small-company stocks
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NEW YORK (AP) — The prospect of continued stimulus from the Federal Reserve and rising optimism among small business owners helped push stock prices back to record levels.

Small business owners were slightly more optimistic in April, according to a survey released Tuesday by the National Federation of Independent Business. That helped push the Russell 2000, an index of small-company stocks, up 1 percent.

The Russell index is 15.7 percent higher since the start of the year, and is doing better than the Standard & Poor's 500 index, which includes larger, global companies. Small stocks are doing well because they are more focused on the U.S., which is recovering, and don't have as much revenue from recession-plagued Europe as larger companies do.

For stock investors, the U.S. economy is "not too hot, not too cold," says Michael Sheldon, chief market strategist at RDM Financial. It's weak enough that the Fed will continue its $85 billion-a-month economic stimulus program, but strong enough for companies to generate healthy earnings.

"There is a lot of momentum in the market right now," says Sheldon. "It's largely being fueled by the Federal Reserve and modest growth in the U.S."

The U.S. economy grew 2.5 percent in the first quarter. While hiring has picked up, the unemployment rate is still at 7.5 percent, above the 6.5 percent rate that the Federal Reserve is targeting. As a result the central bank is expected to keep buying bonds to hold down long-term interest rates and encourage more borrowing and spending.

Earnings of companies in the S&P 500 index, meanwhile, are expected to rise 5 percent in the first quarter, and grow even faster in the second half of the year, according to S&P Capital IQ.

The Dow rose 84 points, or 0.5 percent, to 15,176, as of 2:19 p.m. Eastern Daylight Time. The S&P 500 index rose 12 points, or 0.8 percent, to 1,645. Both are at all-time highs.

The market rose from the opening bell and climbed steadily throughout the morning before slowing in the early afternoon.

It got support after hedge fund manager David Tepper said that he is still bullish on stocks. Speaking on CNBC, Tepper said that investors shouldn't worry about the Fed tapering its stimulus program. The money manager has about $18 billion dollars under management, according to the broadcaster.

Banks and insurers rose 1.4 percent, the biggest gain among of the 10 industry groups in the S&P 500 index. Financial stocks are the biggest gainers in the index during the past month, advancing 5.7 percent.

Bank of America climbed to its highest in more than two years. The lender's stock rose 34 cents, or 2.7 percent, to $13.31. JPMorgan rose 57 cents, or 1.1 percent, to $50.23.

Stocks had a lackluster start to the week Monday as investors questioned whether stocks have risen too far, too fast this year. Even news that retail sales unexpectedly rose in April failed to give the market a boost. The Dow ended the day slightly down and the S&P 500 was flat.

The Dow has risen 15.8 percent this year and the S&P 500 index is 15.4 percent higher. The Dow will have gained for 18 straight Tuesdays if it closes higher. The only day with a longer streak of consecutive gains is Wednesday, with 24, according to Schaeffer's investment research.

Oil edged lower, falling 87 cents, or 0.9 percent, to $95.17 a barrel. Gold fell $9.80, or 0.7 percent, to $1,424.50. Copper dropped the most among major commodities, falling 7.2 cents, or 2.1 percent, to $3.288 a pound.

The dollar edged higher against the euro and the yen.

Among stocks making big moves;

— Take-Two Interactive Software Inc., the online video game publisher whose titles include "Grand Theft Auto," rose 35 cents, or 2.1 percent, to $16.73 after the company reported a profit in its fiscal fourth quarter. Take-Two's as revenue more than doubled on sales of "BioShock Infinite" and other video games.

— Sony's U.S.-listed shares jumped 10 percent after hedge fund manager Daniel Loeb called for the company to sell part of its entertainment business and use the money to shore up its struggling electronics operation. The stock rose $1.90 to $20.79.

In government bond trading, the yield on the 10-year Treasury note rose to 1.95 percent from 1.92 percent. That means demand for the ultra-safe investments declined. The yield on the note is close to its highest in six weeks. It hit a low for the year of 1.63 percent on May 1.

The Nasdaq composite index rose 18 points, or 0.5 percent, to 3,465. The Dow Transport index, considered by investors to be a leading indicator of economic activity, rose 101 points, or 1.6 percent to 6,446.

 
Raging wildfires in South force evacuations in Tennessee
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Fires blaze on the hills above Dollywood’s DreamMore Resort in Pigeon Forge, Tenn. Tuesday morning. Bruce McCamish Photography | The Covington News

ATLANTA (AP) — Raging wildfires fueled by high winds forced the evacuation of thousands of people and damaged hundreds of buildings in a popular resort town on the border of the Smoky Mountains National Park as National Guard troops arrived early Tuesday to help overwhelmed firefighters.

Rain had begun to fall in some areas, but experts predicted it would not be enough to end the relentless drought that has spread across several Southern states and provided fuel for fires now burning for weeks in states including Tennessee, Georgia and North Carolina.

The storms appeared to be taking aim at the nearly 28,000-acre Rough Ridge Fire in north Georgia and the nearly 25,000-acre Rock Mountain Fire that began in Georgia and then spread deep into North Carolina.

In Gatlinburg, Tennessee, officials said hundreds of homes and other buildings, including a 16-story hotel, were damaged or destroyed by flames. And preliminary surveys indicated that Westgate Resorts, with more than 100 buildings, and Ober Gatlinburg were both likely destroyed, according to a news release Tuesday morning.

Emergency officials ordered evacuations in downtown Gatlinburg and Pigeon Forge and in other areas of Sevier County near the Smoky Mountains while crews continue to battle the blaze, which also had crept to the edge of the Dollywood theme park. About 14,000 residents and visitors were evacuated from Gatlinburg alone, officials said.

No deaths have been reported, though several people were hospitalized with burns, emergency officials said in the news release.

Officials say there are about 1,200 people sheltering at the Gatlinburg Community Center and the Rocky Top Sports Park. Several other shelters have opened to house those forced from their homes. TV broadcasts showed residents streaming out of town just as rain started to wet roads.

Workers at an aquarium evacuated because of the wildfires were concerned about the thousands of animals housed there. Ryan DeSears, general manager of Ripley's Aquarium of the Smokies, told WBIR-TV the building was still standing and all workers had been evacuated late Monday. However, he said workers were anxious to return to check on the well-being of the 10,518 animals.

The rain forecast "puts the bull's-eye of the greatest amounts right at the bull's-eye of where we've been having our greatest activity," said Dave Martin, deputy director of operations for fire and aviation management with the southern region of the U.S. Forest Service.

The projected rainfall amounts "really lines up with where we need it," Martin said Monday. "We're all knocking on wood."

After weeks of punishing drought, any rain that falls should be soaked up quickly, forecasters said. It will provide some relief but won't end the drought — or the fire threat, they said.

Drought conditions will likely persist, authorities said. The problem is that rainfall amounts have been 10 to 15 inches below normal during the past three months in many parts of the South, authorities said.

"I think we racked up deficits that are going to be too much to overcome with just one storm system," said Mark Svoboda, director of the National Drought Mitigation Center in Lincoln, Nebraska.

"I would say it's way too early to say 'Yes, this drought is over,'" Svoboda said. "Does it put a dent in it? Yes, but we have a long ways to go."

The rain also brings danger because strong winds at the leading edge of the storms can topple trees and limbs that can kill and injure firefighters, he said.

In Mississippi, trees were reported downed Monday in nearly 20 counties across the state. Sustained winds of 30 to 40 mph with gusts of more than 50 mph were reported and more than 2 inches of rain fell in some areas.

Power outages peaked at more than 23,000 statewide in Mississippi. Powerlines downed by winds sparked grass fires in four counties, said Greg Flynn, a spokesman for the Mississippi Emergency Management Agency.

The storms moved across Alabama on Monday night and fell on Georgia during the overnight hours. High wind warnings were issued for mountainous areas in northern parts of Georgia.

In South Carolina, the stormy forecast was giving hope to firefighters battling a blaze in the northwest corner of the state. The South Carolina Forestry Commission hopes to contain the Pinnacle Mountain fire by the middle of next week.
More rain was expected Tuesday night and Wednesday morning in parts of Louisiana, Mississippi and Alabama.
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Fuller reported from New Orleans. Associated Press writers Rebecca Yonker in Louisville, Kentucky; Jeff Amy in Jackson, Mississippi; Beth Campbell in Louisville, Kentucky; and Jack Jones in Columbia, South Carolina, contributed to this report.