By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks rose on Monday as a flurry
of economic data indicated solid improvements in business activity
across the country.
The S&P 500 (SPX) broke a four-day losing streak and closed
11.22 points, or 0.6%, higher at 1,786.54. The Dow (DJI) closed
higher for the second-straight session, up 129.21 points or 0.8%
higher to 15,884.57. The Nasdaq Composite index (RIXF) closed up
28.54 points, or 0.7%, rising to 4,029.52.
The Empire State Manufacturing Index rebounded in December after
a slump in November, though by less than expected. Markit's U.S.
Purchasing Managers' Manufacturing index rose further into
expansion at 54.4. Industrial production jumped 1.1% in November,
its biggest one-month gain in a year, and surpassed its
pre-recession peak, versus a 0.1% fall the month before.
Investors are also focused on the Fed's two-day policy meeting
and its decision about the $85 billion bond-buying stimulus
program, with some investors expecting tapering to begin this
month.
Despite Friday's gains on the main indexes, stock markets
finished last week with losses, retreating from some of their
cyclical highs. Monday's broad-based gains on the S&P 500 were
led by energy and technology sectors.
"We are transitioning to a period when the good news is good
news. The more markets react this way, the more muted the reaction
to the taper will be," said Drew Wilson, investment analyst at
Fenimore Asset Management.
"Tapering still could be a significant event and the Fed is
worried about such reaction. It is good to see that markets have
began to expect it sooner rather than later," he added.
* Comment: Quincy Krosby, market strategist at Prudential
Financial, says that given really good numbers on industrial
production, especially capacity utilization, markets are satisfied
with the Fed beginning the taper soon. However, she believes
markets are expecting that to happen early next year. "For the past
several weeks, stocks have been following the Treasury markets and
10-year yields did not surge in reaction to the economic data. This
suggests that markets expect the Fed to lay out the groundwork for
the taper, but do not expect it to start in December. The main
basis for bond markets to react that way is the fact that the
inflationary pressures are still below where the Fed would like
them to be in order to start the taper," Krosby told
MarketWatch.
* Today's movers & shakers: LSI Corporation surged 39%, to
$10.96, after the semiconductor maker on Monday agreed to be
acquired by Avago Technologies Ltd. Shares of Twitter Inc. fell
4.1% after analysts at Well Fargo downgraded the stock. IBM shares
rallied 2.9%, as the Dow's worst performer of the year attracted
those who like to bet on the underdogs. Exxon shares rose 2% after
analysts at Goldman Sachs upgraded the stock to buy from neutral.
NuPathe Inc. jumped 47% on news that Endo Health Solutions Inc.
will buy the specialty pharmacy company for about $105 million.
Harvest Natural Resources Inc. HNR rose 10% on news it will sell
all its interests in Venezuela for $400 million in cash. Read more
in the Movers & Shakers column.
* Other markets:Gold and oil futures rose ahead of the Fed
meeting. Stocks in Asia fell after Chinese data disappointed
investors while European stocks rallied on stronger euro-zone
data.
Read more on MarketWatch:
Follow the stock-market action live
Europe stocks rise on strong euro-zone data
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