US STOCKS-Wall St rebounds after steep weekly decline; Fed in focus

Mon Dec 16, 2013 11:52am EST

* Fed meeting in view, investors seek stimulus clarity
    * Avago to buy LSI for $6.6 bln; AIG to sell unit for $5.4
bln
    * S&P 500 near all-time high, but below 14-day moving
average
    * Indexes up: Dow 0.9 pct, S&P 0.7 pct, Nasdaq 0.8 pct


    By Angela Moon
    NEW YORK, Dec 16 (Reuters) - U.S. stocks rose on Monday,
rebounding from their worst week in months as large deals
boosted optimism but investors remained cautious ahead of an
upcoming Federal Reserve policy meeting.
    Equities are coming off their biggest weekly decline in
nearly four months, a pullback that came on concerns the Fed may
begin to wind-down the bond-buying stimulus at its two-day
policy-setting meeting that ends Wednesday.
     The stimulus has been a major contributor to the market's
gains this year, and has been expected to keep a floor under
stock prices for as long as it continues.
    Investors have been trying to gauge the timing of when the
central bank will start winding down its market-friendly bond
purchases, with many market participants expecting the Fed to
announce a tapering in March.
    However, stronger economic data of late, including the
November payroll report, led some to believe the tapering could
come as soon as at the Fed's meeting this week. The Fed has said
it will slow the program when certain economic indicators meet
its growth targets.
    "I still believe January or March are more likely, but the
round of profit taking seen from Dec. 10 through Dec. 12 point
to growing concerns. Traders should expect lots of volatility
and uncertainty as this announcement approaches," said Randy
Frederick, managing director of active trading and derivatives
at the Schwab Center for Financial Research.
    "There is little consensus whether good news is good or bad
right now, with the indicators that I watch showing everything
from fully bearish to fully bullish."
    Among a number of M&A news, Avago Technologies Ltd 
agreed to buy LSI Corp for $6.6 billion, while American
International Group Inc said it would sell its
aircraft-leasing business to AerCap Holdings NV in a
deal valued at about $5.4 billion. 
 
    Shares of Avago jumped 6.8 percent to $48.76 while LSI
surged 39 percent to $10.96. AerCap surged 36 percent to $33.98
and AIG rose 2.3 percent to $50.86.
    The Dow Jones industrial average rose 138.94 points
or 0.88 percent, to 15,894.3, the S&P 500 gained 12.6
points or 0.71 percent, to 1,787.92 and the Nasdaq Composite
 added 30.141 points or 0.75 percent, to 4,031.116.
    The S&P 500 fell below its 14-day moving average on
Wednesday and has not risen above it since, a sign of weak
near-term momentum. However, the benchmark index is less than 2
percent below its record closing high, indicating that recent
selling has not been panic-driven.
    Twitter Inc briefly hit a new all-time high of
$60.20 in early morning trading, but has since fallen 2.2
percent to $57.73 near midday trade.
    Procter & Gamble plans to reorganize its overseas
business as part of Chief Executive A.G. Lafley's plans to cut
costs, according to a Bloomberg report that cited three
unidentified people briefed on the matter. 
    The New York Federal Reserve said on Monday its "Empire
State" manufacturing activity index rose in December to 0.98
from -2.21 in November. Economists in a Reuters survey had
expected a reading of 4.75.
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