NEW YORK ( TheStreet) -- Major U.S. stock markets pared gains Monday afternoon following a news report that the Federal Reserve is likely to address tapering of its monetary stimulus at its two-day meeting that ends Wednesday. The S&P 500 gained 0.76% to 1,639.04, trading as high as 1,646.50 following better-than-expected manufacturing and housing reports which offered signs that the U.S. economic recovery is strengthening. The Dow Jones Industrial Average added 0.73% to 15,179.85 while the Nasdaq tacked on 0.83% to 3,452.13. The Financial Times reported during the afternoon session that Chairman Ben Bernanke during his press conference on Wednesday is likely to signal that the central bank is close to tapering its purchases of mortgage-backed securities and longer-term Treasuries. The Fed's two-day meeting kicks off Tuesday, with its policy announcement, economic projections, and Fed Chairman Ben Bernanke's press conference taking place on Wednesday. "Every investor right now is thinking about what the Fed is going to say, what the Fed is going to do, and the last time they spoke they roiled the market a little bit," said Randy Warren, chief financial officer at Warren Financial Service. "Stocks were up this morning that Bernanke would come out and sooth the markets, say, 'You know what, we're not going to tapper off the bond buying program,'" said Gene Goldman, director of research at Cetera Financial. "There was excitement about that news, and then around 2 p.m. ET a report came out that said that he's still going to stick to his guns and he's actually going to talk about .... reducing the buyback." New York manufacturing conditions modestly improved this month, the New York Federal Reserve said Monday citing its June Empire State manufacturing survey. The index rose nine points to 7.8, beating economists expectations. Most other indicators in the survey fell as the index for number of employees dropped to zero and the average workweek index retreated ten points to minus 11.3. "In our view it would be risky to deliver a hawkish monetary policy message at a time when growth remains sluggish, inflation continues to trend down and market inflation expectations are dropping sharply," Jan Hatzius, Goldman Sachs' chief economist in New York, commented in a report.
Indications for a housing recovery were strengthened as the National Association of Home Builders said confidence in the market for newly-built single-family homes jumped in June, with its housing market index surging eight points to a better-than-expected 52. Economists, on average, were expecting an index level of 45. "Uncertainty -- about the path of growth, inflation and the impact rising interest rates will have on the economy - is likely to prompt the Fed to dampen market expectations of an early taper," noted Drew Matus, deputy chief U.S. economist for UBS Securities in Stamford. "In our opinion the deciding factor for the timing of the initial taper will likely be the path of inflation." Netflix ( NFLX) was the biggest gaining stock in the benchmark index. Shares advanced 7.1% to $229.23 after Netflix announced its largest original content deal ever, with Dreamworks Animation ( DWA). The agreement will provide viewers with more than 300 hours of new programming, with new shows inspired by characters from DreamWorks Animation's hit franchises and upcoming feature films, as well as its Classic Media library. Dreamworks shares popped 4.1% to $23.74 on the Nasdaq. Time Warner Cable ( TWC) was one of the biggest decliners on the S&P 500 after a Raymond James research note debunked rumors that Charters Communication wished to enter a merger of equals. Shares of the cable giant dropped 2.5% to $101.29. Weyerhaeuser ( WY ) was 1.6% to $28.74 after the lumber giant named Doyle Simon as its new CEO, and said it agreed to buy Longview Timber LLC for $2.65 billion from Brookfield Asset Management ( BAM ). Weyerhaeuser also said it was exploring strategic alternatives for its real estate company that could include a merger, a sale or spinoff of the business. Facebook ( FB ) rose 1.7% to $24.03 as the company gathered up the press for a major product announcement on Thursday, asking attendees to "join us for coffee and learn about a new product." Amicus Therapeutics ( FOLD ) plunged 20.4% to $2.54 after the U.S. Food and Drug Administration refused a request from the company to amend the statistical plan for a failed phase III study of its experimental Fabry disease drug Amigal. The benchmark 10-year Treasury was falling 13/32, raising the yield to 2.182%. The dollar was slipping 0.02% $80.60 according to the
U.S. dollar index.