NEW YORK: Stocks rose 1 percent on Monday as investors speculated the Federal Reserve will reaffirm its commitment to supporting the economic recovery when it meets this week.
Technology and energy shares led gains on the S&P 500, pointing to bets on a stronger economy.
Equities were supported by data that showed homebuilder sentiment jumped in June, rising to highest in seven years since the start of the housing crisis. The PHLX housing sector index rose 2.2 percent.
While consensus is building among policymakers that the time is approaching for the central bank to scale down its program of buying $85 billion of bonds each month, also known as quantitative easing, investors are divided over when the Fed will start to wind down the stimulus.
The central bank's Federal Open Market Committee will meet on Tuesday and Wednesday, issuing a statement at the conclusion on Wednesday, followed shortly after by a news conference by Fed Chairman Ben Bernanke.
Bernanke had said on May 22 that the Fed could reduce the pace of QE in the "next few meetings," sparking a global bond and stock selloff.
"I think that the market's positioning itself ahead of the comments that will be coming from Chairman Bernanke. I think the chairman will probably say something to the effect the Fed will use every means at its disposal to make sure the economic growth we've seen continues," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore.
The Dow Jones industrial average was up 160.20 points, or 1.06 percent, at 15,230.38. The Standard & Poor's 500 Index was up 16.64 points, or 1.02 percent, at 1,643.37. The Nasdaq Composite Index was up 41.15 points, or 1.20 percent, at 3,464.71.
Major indexes closed lower on Friday for the third week of losses in the past four.
Volatility in stocks has spiked, with the Dow industrials averaging daily swings near 191 points since Bernanke's remarks. The average for 2013 before then was about 110 points.
Among rising stocks, video streaming company Netflix Inc's shares jumped 7 percent to $228.99 after it signed a multiyear deal for programming from DreamWorks Animation . DreamWorks added 4.2 percent to $23.78.
Advanced Micro Devices Inc rose 3.5 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.
Growth in New York state manufacturing picked back up in June, but the details of a report by the New York Fed Bank were less encouraging as new orders and employment weakened. - Reuters
Asian shares reverse losses, capped before Fed meeting
TOKYO: Asian shares recouped early losses on Monday but prices were capped as investors settled in to wait for the U.S. Federal Reserve meeting outcome later in the week - and some long-awaited clarity on its intentions for monetary stimulus.
Uncertainty over the Fed's future policy course has triggered a sharp sell-off in broad risk assets over the past few weeks, offering dip buying levels for some Asian equities.
Wall Street fell on Friday for its third negative week in four as investors took profits from recent gains, while data showed the U.S. economic recovery was still not strong enough to warrant an imminent change in the Fed's current position.
"Market players both domestic and overseas are taking a wait-and-see stance," said Kim Young-il, a market analyst at Daishin Securities, of South Korean shares which traded nearly flat but hovered near a seven-month low hit last week.
"The market at its current level, however, has limited room for further downward moves. Valuations are cheap," Kim added.
MSCI's broadest index of Asia-Pacific shares outside Japan erased earlier losses to rise 0.5 percent. It advanced 1.6 percent on Friday for its best daily gain since January 2, but ended the week down 1.3 percent after tumbling to its lowest since September on Thursday.
Australian shares regained positive territory to rise 0.4 percent from a 1 percent drop earlier in the session. They posted their biggest one-day rise in 18 months on Friday.
Still, investors remained wary ahead of the Fed policy meeting over Tuesday and Wednesday, where the central bank may conceivably taper its massive bond-buying program as long as the economy is showing some improvement.
Data on Friday showed May industrial output was unchanged, below a 0.2 percent forecast rise, while Thomson Reuters and University of Michigan's index of U.S. consumer sentiment unexpectedly fell from a near six-year high in early June.
The U.S. economy may not be picking up much steam but it was also not facing deflationary pressure, with the producer price index up 0.5 percent last month, above a 0.1 percent gain forecast.
"Although no change in policy settings is expected, the ability of Fed Chairman Bernanke to communicate effectively the Fed's strategy over 'tapering' will be crucial to determine whether market volatility persists or lessens," analysts at Credit Agricole CIB said in a research note.
The dollar was top-heavy against a basket of six major currencies, trading up 0.06 percent but staying near a four-month low of 80.50 hit on Thursday.
Goldman Sachs said in a research report that despite moderate growth in the United States relative to the rest of the world, the latest TIC data released last week indicated a lack of any notable capital inflows, which, along with the persistent trade deficit, remains negative for the dollar.
The dollar recovered against the yen, however, rising 0.5 percent to 94.57 and helping improve sentiment for Japan's benchmark Nikkei stock average <.N225>, which rose 1.2 percent after opening lower.
The dollar hit a 10-week low of 93.75 yen on Thursday, bringing it down nearly 10 percent from last month's 4-1/2-year peak of 103.74 yen. The dollar ended last week down 3.4 percent for its biggest weekly loss since July 2009.
The dollar's loss against the yen has also been linked to speculators and investors cutting back their yen short positions after the Bank of Japan took no action to quell a highly volatile domestic bond market last week, sparking a sell-off in the Nikkei and erasing gains made since the central bank's big-bang stimulus unveiled on April 4, which had helped propel the index up to a 5-1/2-year high last month.
"The reaction to the BOJ's no-action brought the dollar/yen and Nikkei back to levels before the bazooka stimulus in April, leaving markets wondering whether the BOJ's 2 percent inflation target is achievable without a weak yen," said an official at a Japanese institutional investor.
On the interest rate front, India's central bank will announce its rate decision later in the session, coming after central banks in the Philippines and South Korea held rates steady last week amid the spike in global risk aversion.
U.S. crude futures fell 0.3 percent at $97.53 a barrel and Brent eased 0.2 percent to $105.76.
London copper rose 0.9 percent to $7,151 a ton on short covering following its steepest weekly decline in two months last week, ahead of the Fed meeting. - Reuters

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    June 2013