By Uday Sampath Kumar and Devik Jain
(Reuters) - Wall Street rose on Monday and the S&P 500 edged closer to its biggest quarterly gain since 1998 as investors clung to hopes of a stimulus-backed economic rebound, while a jump in Boeing shares boosted the blue-chip Dow.
The planemaker rose 7.7% after the Federal Aviation Administration confirmed on Sunday it had approved key certification test flights for the grounded 737 MAX that could begin as soon as Monday.
A spike in virus infections in Southern and Western states last week sparked a sell-off in equities, but the threat of a deeper-than-feared recession has led investors to expect that the Federal Reserve or Congress will step in with more stimulus.
"The market believes that the Fed has its back," said Sam Stovall, chief investment strategist at CFRA Research in New York.
"If things get really bad, the Fed will step in with additional monetary easing and basically reach into their bag of tricks to do whatever they need to support the market."
All 11 major S&P 500 sub-indexes were in the black, with industrial and material stocks leading gains.
The benchmark S&P 500 has rebounded about 39% since its March lows and is now trading above its 200-moving average price, an indicator of long-term momentum, as the U.S. economy shows signs of picking up.
Data on Monday showed contracts to buy previously owned homes rebounded by the most on record in May, suggesting the housing market was starting to turn around. Later this week, investors will focus on employment and consumer confidence data for June.
"Any positive data based on actual spending is going to be well received, given the backdrop where there are a lot of questions about where we are in this reopening phase," said Keith Buchanan, portfolio manager at GlobAlt Investments in Atlanta.
Still, the BlackRock Investment Institute downgraded U.S. equities to "neutral", citing risks of fading fiscal stimulus, an extended epidemic as well as renewed U.S.-China trade tensions.
Analysts at Morgan Stanley said a further injection of cash was critical to the bank's thesis for a "V"-shaped U.S. economic recovery.
Although a $3 trillion aid bill was passed by the House of Representatives in May, the Republican-controlled Senate has not taken up the package and lawmakers are not expected to move toward another coronavirus bill until sometime in July.
At 12:49 P.M. ET, the Dow Jones Industrial Average rose 475.43 points, or 1.9%, to 25,490.98, the S&P 500 gained 38.14 points, or 1.27%, to 3,047.19 and the Nasdaq Composite added 103.00 points, or 1.06%, to 9,860.22.
Coty Inc jumped 12.7% after the company said it would buy a 20% stake in Kim Kardashian West's makeup brand for $200 million.
Advancing issues outnumbered declining ones on the NYSE by a 3.43-to-1 ratio; on the Nasdaq, a 2.43-to-1 ratio favored advancers.
The S&P 500 posted one new 52-week highs and no new lows; the Nasdaq Composite recorded 47 new highs and 15 new lows.
(Reporting by Pawel Goraj in Gdansk and Uday Sampath and Devik Jain in Bengaluru; Editing by Sagarika Jaisinghani and Arun Koyyur)