NEW YORK (Reuters) - Wall Street bounced on Monday as investors were heartened by signs of progress in talks to resolve the fiscal crunch and data that showed the housing recovery was gaining strength.
The major indexes climbed more than 1 percent after tumbling in recent weeks on nervousness over when and if Washington will come to an agreement to avoid the series of tax and spending changes that will start to come into effect in the new year.
Over the weekend, leading Democratic and Republican lawmakers expressed confidence that they could reach a deal to avert the "fiscal cliff", even as they laid down markers on raising taxes and spending cuts that may make any agreement more difficult.
"At this point, we haven't seen any of the details, so we're still a bit cautious but optimistic that we will see an agreement reached some time," said Joseph Tanious, global market strategist at J.P. Morgan Funds in New York.
"It's become fairly clear that both sides of the aisle are wiling to compromise and want to negotiate," Tanious said. Investors are getting into the market now in anticipation of a relief rally in the future when a final agreement is reached, he said.
Stronger-than-expected earnings from Lowe's and Tyson Foods, as well as encouraging housing data also contributed to the market's advance.
U.S. home resales unexpectedly increased in October, while separate data showed homebuilder sentiment rose to its highest level in over six years in November.
The PHLX Housing Index <.hgx> rose 2 percent.
The Dow Jones industrial average <.dji> gained 173.72 points, or 1.38 percent, to 12,762.03. The Standard & Poor's 500 Index <.spx> rose 22.52 points, or 1.66 percent, to 1,382.40. The Nasdaq Composite Index <.ixic> climbed 51.59 points, or 1.81 percent, to 2,904.72.
The bounce "could last for a few more days, but ultimately we'll need to see what type of legislation or forward progress comes out of Washington," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.
The S&P 500 edged above its 200-day moving average around 1,382. Closing above the key technical level with strong volume could provide additional support for the index.
Shares of Lowe's Cos Inc
Tyson Foods Inc
Intel shares
Commodities prices surged, boosting shares of resource companies. Freeport-McMoRan
(Editing by Kenneth Barry)
Wall Street bounces on budget talk optimism, housing data
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Wall Street bounces on budget talk optimism, housing data
