Stocks traded higher in the United States on Tuesday, giving the Standard & Poor’s 500-share index its fourth consecutive gain on increased hopes for central bank stimulus measures ahead of the Federal Reserve’s policy meeting.


The Federal Open Market Committee began its two-day meeting on interest rate policy Tuesday, with expectations increasing that it may extend its effort, known as “Operation Twist,” to drive down long-term borrowing costs.


At the close of trading, the S.&P. 500 rose 1 percent, the Dow Jones industrial average gained 0.8 percent, and the Nasdaq composite added 1.2 percent.


“It’s a little bit of anticipation ahead of the Fed meeting,” said Fred Dickson, chief market strategist at D.A. Davidson & Company of Lake Oswego, Ore. “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.”


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 right around 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 the New Democracy party leader, Antonis Samaras, that would seek to renegotiate the terms of Greece’s 130 billion euro bailout agreement.


In Europe, markets closed well higher. The Euro Stoxx 50 gained 1.9 percent, and the FTSE 100 in Britain added 1.8 percent. German analyst and investor sentiment dropped in June at its fastest rate since October 1998, but the DAX index there rose 1.8 percent.


Economic data showed housing starts in the United States 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.


Oracle rose 3 percent after it reported stronger-than-expected quarterly profit after the close of trading 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 wealth management unit outside the United States, reported to be worth up to $2 billion. Bank of America shares gained 5 percent.


Walgreen tumbled 5.5 percent after the pharmacy chain reported quarterly earnings and said it would buy a 45 percent stake in Alliance Boots for $6.7 billion in a cash and stock deal.


FedEx gained 3 percent after the package delivery company reported fourth-quarter earnings and provided an outlook for the first quarter and 2013.