By Inyoung Hwang and Katie Brennan
NEW YORK – U.S. stocks rose, with the Standard & Poor’s 500 Index rebounding from last week’s decline, as investors weighed prospects for less economic stimulus before this week’s Federal Reserve policy meeting.
Nine of 10 industries in the S&P 500 advanced, with technology and energy stocks rising at least 1.3 percent. Netflix Inc. jumped 6.7 percent after agreeing to a multi-year deal with DreamWorks Animation SKG Inc. to obtain original programming. Micron Technology Inc. advanced 4.5 percent after Citigroup Inc. lifted its price target on the largest U.S. maker of memory chips.
The S&P 500 climbed 1 percent to 1,642.33 at 12:14 p.m. in New York. The Dow Jones Industrial Average rallied 156.03 points, or 1 percent, to 15,226.21. Trading of S&P 500 companies was 10 percent lower than the 30-day average at this time of day.
“There is a lot of pessimism about potential tapering, but it has already been priced into the markets,” Alan Gayle, a senior strategist at RidgeWorth Capital management in Richmond, Va., which oversees about $48 billion of assets, said in a phone interview. “If the Fed does decide to remove some if its support, the truth of matter is, historically, equity markets can survive in a rising rates environment.”
U.S. stocks fell last week as investors speculated whether Fed Chairman Ben S. Bernanke will signal a reduction of stimulus efforts. While the S&P 500 has retreated 1.5 percent from its May 21 record, the day before Bernanke said the central bank could pare stimulus if the U.S. economy improves sustainably, the U.S. equity benchmark rallied an average 16 percent over two years the last four times the central bank started raising interest rates, according to data compiled by Bloomberg.
The Fed will hold its two-day policy meeting beginning tomorrow, with Bernanke scheduled to speak after the central bank’s decision on June 19. Investors have been watching economic data to determine whether growth is strong enough to prompt the bank to scale back stimulus measures.
“All eyes are going to continue to be on the Fed, but today can be a little more attributed to a buy-on-the-dip mentality that’s permeated the market,” Robert Pavlik, chief market strategist at Banyan Partners LLC, said by phone. His firm manages about $1.4 billion. “The S&P 500 was testing the lower end of its trading range, hitting around the 50-day moving average. That’s certainly giving the market a reason a bounce.”
The equity index recovered last week from a brief dip below its average price in the past 50 days, a measure that’s watched by some analysts to gauge the market’s trend. The S&P 500 has stayed above the threshold on all trading days so far this year except for four.
A report today showed manufacturing in the New York region felt more optimistic in June even as orders, sales and employment dropped. The Federal Reserve Bank of New York’s general economic index climbed to 7.8 this month, the highest reading since March, from minus 1.4 in May. Readings of greater than zero signal expansion in New York, northern New Jersey and southern Connecticut.
Technology shares paced gains among U.S. equities today, surging 1.4 percent. Cisco Systems Inc. jumped 3.1 percent to $24.83 to lead gains in the Dow. Energy producers rose 1.3 percent as oil fluctuated near a nine-month high. Phone stocks were the only group to decline, falling 0.1 percent.