NEW YORK — U.S. stocks finished higher Monday, bouncing back from a four-week retreat that has the S&P 500 index down 13 percent so far this month.
"The stock market is screaming to Ben Bernanke at the top of its lungs for a QE3, and the day's gains is in anticipation of such," said Keith Springer, president of Springer Financial Advisors. "If we get it, we'll have a nice rally; if we don't, we'll have a bloodbath."
Federal Reserve Chairman Ben Bernanke is scheduled to speak at a central bank meeting on Friday in Jackson Hole, Wyo.
The Dow Jones industrial average rose 37 points, or 0.3 percent, to close at 10,854.65, with 23 of its 30 components gaining ground, led by Hewlett-Packard Co., up 3.6 percent.
The blue-chip index lost 4 percent last week, its fourth straight weekly decline.
"The phrase 'we are all Europeans now' has never run truer than the past week," Paul Nolte, managing director at Dearborn Partners, said of the European Union's debt crisis, a prime focus of Wall Street's worries.
"Until the stock market can string a few winning sessions together, the path of least resistance seems to be lower still," he added.
After sliding 4.7 percent last week, the S&P 500 on Monday rose 0.3 point to finish at 1,123.82.
The S&P 500 and Dow both logged their first climb in three sessions.
"The reality is that a QE3 has become less likely after two Fed board members said they do not want Fed actions to look like they are in the business of generating stock returns," said Springer, adding that the pullback in U.S. stocks from the day's highs reflects this.
The Nasdaq composite index rose 3.54 points to end at 2,345.38, marking its first gain in five sessions.
"Investors this week will try to assess whether the outlook for the economy is quite as dire as the markets seem to suggest," said David Kelly, chief market strategist at JPMorgan Funds.
"The chorus of economists and strategists predicting recession has grown louder in recent days and the withering impact of these pronouncements on confidence is sadly boosting the chances that they could be right. However, so far neither comprehensive data for July nor the more spotty data for August confirm this," he added.
The Federal Reserve Bank of Chicago's national activity index improved in July, going to negative 0.06 from negative 0.38 in June.
"We can now add this morning's data point to the list of indicators that suggest the U.S. may indeed avoid a recession," said Dan Greenhaus, chief global strategist at BTIG.
Crude futures for September delivery, which expired at the end of Monday's session, gained $1.86 to $84.12 a barrel on the New York Mercantile Exchange. Gold futures surged to a record, finishing just below $1,900 an ounce.