Wall Street gains on Fed hopes after weekly loss

By Rodrigo Campos

NEW YORK (Reuters) - Stocks rose 1 percent early on Monday, with traders focused on expectations the Federal Reserve will reinforce this week its commitment to supporting the economic recovery.
Energy and financial shares led gains on the S&P 500, pointing to bets on a stronger economy. The PHLX housing sector index (.HGX) rose 2.4 percent.
Equities held on to sharp gains after data showed U.S. homebuilder sentiment jumped in June, rising above 50 for the first time since the start of the housing crisis in a vote of confidence for the sector's recovery.
While consensus is building among policymakers that the time is nearing for the U.S. central bank to scale down its quantitative easing, or $85 billion-a-month bond-buying program, divisions remain over when the Fed will start to wind down its purchases.
Chairman Ben Bernanke said on May 22 during Congressional testimony that the Fed could reduce the pace of QE in the "next few meetings," sparking a global bond and stock selloff.
"There's hopes we'll get clarity from the Fed this week," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
"The market is beginning to adjust itself to an eventual trimming from the Fed toward the beginning of next year," he said. "I think we're headed for more volatility but the market stays range-bound."
Volatility in U.S. equities has spiked, with the average daily range in the Dow industrials near 191 points since Bernanke's testimony in May. The average for 2013 before that was just below 110 points.
Major indexes closed Friday their third negative week in the last four.
The Dow Jones industrial average (.DJI) rose 157.5 points or 1.05 percent, to 15,227.68, the S&P 500 (.SPX) gained 15.6 points or 0.96 percent, to 1,642.33 and the Nasdaq Composite (.IXIC) added 35.44 points or 1.04 percent, to 3,459.
Netflix Inc (NFLX.O) shares jumped 5.8 percent to $226.09 after it signed a multi-year deal for original content with DreamWorks Animation (DWA.O). DreamWorks added 6.8 percent to $24.37.
Terex Corp (TEX.N) tumbled 10.9 percent to $28.28 after the machinery maker cut its earnings forecast.
Advanced Micro Devices Inc (AMD.N) rose 3.8 percent to $4.09 after Barron's said prospects are looking better for the No. 2 maker of microprocessors for personal computers.

Growth in the New York state manufacturing sector picked back up in June, but the details were less encouraging as new orders contracted further and measures of employment weakened, a report from the New York Federal Reserve showed on Monday.

(Reporting by Rodrigo Campos; Editing by Theodore d'Afflisio and Nick Zieminski)