Wall Street rebounds ahead of Fed's policy meeting

U.S. stocks closed higher Monday, witnessing a relief rally after major stock indices fell for two consecutive weeks, as investors were awaiting the result of the Federal Reserve's closely-watched two-day monetary policy meeting.

The blue-chip Dow Jones Industrial Average soared 129.21 points, or 0.82 percent, to 15,884.57. The S&P 500 rose 11.22 points, or 0. 63 percent, to 1,786.54. The Nasdaq Composite Index ticked up 28. 54 points, or 0.71 percent, to 4,029.52.

Wall Street moved back and forth in the past couple of weeks as investors were trying to ponder whether the U.S. central bank would move soon to scale back its quantitative easing as early as in the upcoming meeting on Tuesday and Wednesday based on strengthening data released recently.

The economic calendar came in positive Monday but failed to spook the market as investors seemed to be preparing themselves for a Fed tapering.

Some economists believe that the U.S. economy would be able to sustain itself when top Fed officials decide to cut back massive asset purchases soon.

On the economic front, U.S. industrial production jumped 1.1 percent in November, the biggest gain in a year, the Fed said in a report released Monday. Meantime, U.S. capacity utilization jumped to 79 percent, exceeding market forecasts, it added.

"Positive surprises in both industrial production and capacity utilization in November (and upward revisions to both in October) will give the Fed more support to initiate the beginning of tapering in their meeting this week," Jay Morelock, senior economist at FTN Financial, said in a note Monday.

Flash U.S. Manufacturing Purchasing Managers' Index in December registered 54.4, down marginally from 54.7 in the preceding month, but remained close to November's 20-month peak, according to the Markit, a global financial information services company.

Meanwhile, manufacturing conditions in December were flat for New York manufactures, according to a survey released Monday by the Federal Reserve Bank of New York. The survey showed that manufacturing activity in the region rose 3.19 points to 0.98 in December from a negative reading in November.

Labor productivity of the U.S. nonfarm business sector also increased at a 3-percent annual rate during the third quarter, said the Labor Department.

In corporate news, shares of American International Group increased 1.13 percent to 50.29 U.S. dollars after the insurer announced it is selling its plane-leasing business.

The CBOE Volatility Index, widely considered as a fear gauge of the market, was up 1.71 percent to end at 16.03.

In other markets, oil prices climbed Monday on optimistic data. Light, sweet crude for January delivery gained 88 cents to settle at 97.48 dollars a barrel on the New York Mercantile Exchange, while Brent crude for January delivery moved up 1.64 dollars to close at 110.47 dollars a barrel.

Gold futures on the COMEX division of the New York Mercantile Exchange gained momentum on a soft dollar Monday. The most active gold contract for February delivery rose 9.8 dollars to settle at 1,244.4 dollars per ounce.

The U.S. dollar weakened against major currencies on Monday one day before the Fed's last policy meeting in the year.

In late New York trading, the euro rose to 1.3764 dollars from 1.3734 dollars in the previous session, and the British pound increased to 1.6302 dollars from 1.6295 dollars.