A brighter outlook from FedEx Corp and a pickup in sales of new homes sent U.S. stocks higher on Monday, building on the best three-week period for the S&P 500 Index in a year.
Economic bellwether FedEx rose 4.6 percent after the package delivery and business services company raised its quarterly and full-year earnings forecasts, citing strong volume growth, a sign the global economic recovery is on track.
The FedEx news is important because it shows the economy is stronger than most economists felt, said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville.
Data showed sales of new, single-family homes rebounded in June from the prior month's record low, with the percentage increase at its largest since May 1980. The data reinforced the notion the economy will not slip back into recession, a worry that has recently helped investors shy away from stocks.
Any good numbers now on the economy are going to help the market because the double dip was almost discounted, said Bittles.
Home building products manufacturer Masco Corp rose 3 percent to $11.76 and led gains on the Morgan Stanley housing index <.HGX>, which rose 1.6 percent. Masco is expected to report quarterly results after the closing bell.
The Dow Jones industrial average <.DJI> gained 49.04 points, or 0.47 percent, to 10,473.66. The Standard & Poor's 500 Index <.SPX> rose 6.01 points, or 0.55 percent, to 1,108.67. The Nasdaq Composite Index <.IXIC> added 10.74 points, or 0.47 percent, to 2,280.21.
The S&P rose 7.8 percent during the three weeks ended Friday, the largest gain in such a period since the first week of August 2009.
Some technical measures, including momentum and the moving average convergence-divergence, indicate a bullish trend on the S&P 500, which closed above the key 1,100 level on Friday for the first time in a month.
Genzyme Corp continued to rise on takeover speculation, as the Wall Street Journal said Britain's GlaxoSmithKline Plc had recently made a very casual approach, to the U.S. biotech company.
U.S.-traded Glaxo shares dipped 0.4 percent to $36.37, and Genzyme added 6.4 percent to $66.50.
Sources familiar with the matter said on Friday that Sanofi-Aventis was sounding out Genzyme, prompting a 15 percent jump in the U.S. biotech company's market value to $16.7 billion.
(Editing by Padraic Cassidy)