NEW YORK: Stocks rose Monday, giving the Standard & Poor’s 500 index its biggest gain in about a month, as investors weighed prospects for a budget deal in Washington.
All 10 groups in the S&P 500 rose as financial companies gained the most, adding 2.1 percent. American International Group Inc. climbed 3 percent on plans to sell as much as $6.5 billion of AIA Group Ltd. shares. Hartford Financial Services Group Inc. jumped 3.6 percent as Sun Life Financial Inc.’s deal to sell a U.S. annuity unit raised the prospect for the insurer seeking to sell a similar business. Tenet Healthcare Corp. rose 1.8 percent as Deutsche Bank AG upgraded the hospital chain.
The S&P 500 added 1.2 percent to 1,430.36. The measure capped its biggest gain since Nov. 23.
The Dow Jones industrial average rose 100.38 points, or 0.8 percent, to 13,235.39.
“It’s a historic tug of war: pulling on one side is the fiscal cliff, pulling the other side is continued global monetary easing,” David Sowerby, a portfolio manager at Boston-based Loomis Sayles & Co., said. His firm oversees about $175 billion. “The most positive thing for the market is valuation and an accommodative Fed policy.”
The equity benchmark has lost 0.7 percent so far this quarter as President Barack Obama and House Republicans differed over how to avoid automatic deficit-reduction measures. The Federal Reserve said last week that it will buy $45 billion a month of Treasury securities starting in January to help boost growth, in addition to $40 billion a month of mortgage-debt purchases under a previous plan.
The S&P 500 is trading at 14.6 times reported earnings, compared with the average of 16.4 since 1954, data compiled by Bloomberg show. The benchmark is up 14 percent this year.
Manufacturing in the New York region shrank more than forecast in December, showing weakness as the year ends.
An index of home builders rallied 4.5 percent, the most since Oct. 3, as all its 11 members gained. A Wells Fargo & Co. monthly survey of home building sales managers showed that 1 percent of respondents lowered prices in November, the fewest in seven years. Lennar Corp. climbed 4 percent to $38.80. D.R. Horton Inc. added 5.1 percent to $19.69, while PulteGroup Inc. gained 5.3 percent to $18.04.
Smith & Wesson Holding Corp. led a decline in stocks of firearms makers amid talks about gun control. Smith & Wesson dropped 5.2 percent to $8.66, after a 4.3 percent loss on Friday. Sturm Ruger & Co. slipped 3.5 percent to $44.
J.C. Penney Co. fell 1.6 percent to $20.64, ending a seven-day, 20 percent gain. The department-store company is “resuming a more aggressive promotional stance” to boost store traffic, said Brian Nagel, an analyst with Oppenheimer & Co. While the strategy may help strengthen its cash holdings, the recent stock rebound might not prove sustainable, Nagel said in a note.