 "Wall St gains as investors bet on Fed support")
US stocks rose 1% on Monday, recovering much of last week's losses in one day as investors bet that the Federal Reserve would reaffirm its policies of supporting the economic recovery later this week.
Consensus is building that the US central bank will soon scale down its policy of buying $85 billion of bonds each month, a policy widely credited with fueling the S&P 500's 15-% jump in 2013. While investors are anxious to find out when the Fed will start to wind down the stimulus, it is not expected to announce any changes this week.
"Bernanke's first goal is to get people to understand that there will be no tightening in the rate of purchases. And since there are acceptable signs of growth in the economy, investors with a medium or longer-term horizon are happy to be buying in this environment," said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Global Investments.
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The Federal Open Market Committee will meet on Tuesday and Wednesday, then release a statement on Wednesday, followed shortly after by a news conference by Fed Chairman Ben Bernanke.
US homebuilder sentiment jumped in June to a 7-year high, the highest level since the start of the housing crisis. The PHLX housing sector index rose 2.6 %. D.R. Horton Inc rose 1.2 % to $24.18 while Beazer Homes added 1.4 % to $20.09.
The Dow Jones industrial average was up 104.82 points, or 0.70 %, at 15,175.00. The Standard & Poor's 500 Index was up 9.76 points, or 0.60 %, at 1,636.49. The Nasdaq Composite Index was up 27.27 points, or 0.80 %, at 3,450.82.
With the day's gains, the S&P is about 1.9 % below its all-time closing high reached on May 21. But trading volume was light as many traders held off on adding to positions ahead of getting further clarity.
"Short-term traders may want to see the whites of the Fed's eyes before they do anything," said McDonald, who helps oversee about $760 billion in assets.
Volatility in markets has spiked since May 22, when Bernanke said the Fed could reduce the pace of its stimulus in the "next few meetings." The Dow industrials have averaged daily swings near 191 points since then, well over the 110 points that was the year-to-date average before then.
Still, sectors tied to the pace of economic growth outperformed on Monday, as technology and energy shares led the day's gains. Telecommunications stocks, a defensive sector, were lower.
Netflix Inc jumped 7.1% to $229.03 as the biggest percentage gainer on the S&P after it signed a multi-year deal for programming from DreamWorks Animation . DreamWorks added 4.3% to $23.78.
Advanced Micro Devices Inc rose 3.6% to $4.08 after Barron's said prospects look better for the maker of microprocessors for personal computers.
On the downside, Time Warner Cable Inc fell 2.8 % to $101.04 after Raymond James downgraded the stock to "market perform" from "outperform." Terex Corp tumbled 9.5 % to $28.73 after the machinery maker cut its earnings forecast.
In another economic report, the New York Fed's "Empire State" general business conditions index showed expansion in June after a negative reading in the previous month, but the data also showed measures of new orders and employment this month fell to five-month lows.