By Caroline Valetkevitch
NEW YORK (Reuters) - U.S. stocks rebounded on Monday, climbing 1 percent and recovering last week's losses, as investors speculated the Federal Reserve will reaffirm its policies of supporting the economic recovery later this week.
Technology and energy shares led gains on the S&P 500, pointing to bets on a stronger economy. The S&P tech sector index was up 1.6 percent.
Data showing U.S. homebuilder sentiment jumped in June to the highest in seven years since the start of the housing crisis helped support stocks.
Consensus is building among policymakers that the time is approaching when the U.S. central bank will scale down its policy of buying $85 billion of bonds each month, so-called quantitative easing, but investors are anxious to find out when the Fed will start to wind down the stimulus.
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.
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Stocks pulled back from a recent rally after Bernanke said on May 22 that the Fed could reduce the pace of QE in the "next few meetings." The rally, which lifted the Dow and S&P 500 to record highs, has been supported by the Fed's continued stimulus efforts.
"There's certainly a lot of things the market should be concerned about besides the Fed," said Warren West, principal at Greentree Brokerage Services in Philadelphia. "We expected this bounce, but I think the market feels like it's exhausted at this level."
The Dow Jones industrial average was up 163.61 points, or 1.09 percent, at 15,233.79. The Standard & Poor's 500 Index was up 16.29 points, or 1.00 percent, at 1,643.02. The Nasdaq Composite Index was up 41.94 points, or 1.23 percent, at 3,465.50.
Major indexes closed lower on Friday, ending three weeks out of four with losses. However, the S&P 500 is still up 15.2 percent for the year.
Since Bernanke's remarks, volatility in stocks has spiked, with the Dow industrials averaging daily swings near 191 points. The average for 2013 before was about 110 points.
Among rising stocks, video streaming company Netflix Inc's shares jumped 7.1 percent to $229.03 and were the biggest percentage gainer on the Nasdaq 100 index <.NDX> after it signed a multiyear deal for programming from DreamWorks Animation . DreamWorks added 4.3 percent to $23.78.
Advanced Micro Devices Inc rose 3.6 percent to $4.08 after Barron's said prospects look better for the maker of microprocessors for personal computers.
Terex Corp tumbled 9.5 percent 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.
(Additional reporting by Alison Griswold; Editing by Theodore d'Afflisio, Nick Zieminski and Kenneth Barry)