US stocks advance amid Greek talks as Fed policymakers meet

New York: US stocks advanced, erasing Monday’s slide, as investors assessed the chances for an agreement between Greece and its creditors while Federal Reserve policymakers began a two-day meeting.

Aetna Inc. and UnitedHealth Group Inc. rose more than 2% amid speculation the health-insurance industry is headed for a round of mergers. Monster Beverage Corp. jumped 4.3% to lead consumer staples higher. Microsoft Corp. and Oracle Corp. gained more than 1.3%. United Rentals Inc. fell 2.6% after an analyst downgrade, and airline shares declined for a second day.

The Standard & Poor’s 500 Index climbed 0.6% to 2,096.61 at 2:52 p.m. in New York, with the gauge above its average price during the past 100 days. The Dow Jones Industrial Average added 116.88 points, or 0.7%, to 17,908.05. The Nasdaq Composite Index gained 0.6%.

“We had a selloff the last few days, and we’re seeing a bounce back from an oversold condition,” said Matt Maley, an equity strategist at Miller Tabak & Co. in Newton, Massachusetts. “I don’t think anyone wanted to be caught short ahead of the Fed meeting. The situation in Greece is still up in the air and will be for a little while, but it doesn’t look like that’s holding investors back today.”

Investors are looking for indications of progress in Greece’s debt talks after the Mediterranean nation signaled it won’t make further concessions to unlock bailout funds needed to avoid default. German Chancellor Angela Merkel struck a more conciliatory tone, saying she’ll “do everything possible to keep Greece in the euro zone.”

Fed meeting

The Federal Reserve began a two-day meeting on Tuesday, at which officials are expected to leave interest rates unchanged after the economy contracted in the first quarter amid harsh winter weather. Policymakers anticipate growth will rebound enough to potentially allow for a rate increase this year.

Recent data from retail sales to wage growth have been improving, though disappointing factory data Monday increased investor uncertainty as to whether the rebound is strong enough to withstand a rate increase.

A report on Tuesday showed May housing starts totaled 1.04 million at an annualized rate following April’s revised 1.17 million pace, capping the best back-to-back readings since the last two months of 2007. The median estimate of economists surveyed by Bloomberg called for 1.09 million. Permits for future projects climbed to the highest level in almost eight years.

Consumer staples

The Chicago Board Options Exchange Volatility Index slipped 2.1% to 15.06 Tuesday as equities extended an advance, with the S&P 500 reversing Monday’s drop. The gauge, known as the VIX, reached an 11-week high on Monday.

“The market correctly realizes that Greece is less of a risk than it was a few years back,” said Anthony Valeri, a market strategist with LPL Financial Corp. in San Diego. “Any kind of financial disruption is limited. Investors are correctly viewing this as more of an isolated incident that has far greater ramifications for Greece than it does for the global economy and financial markets.”

Consumer staples shares rose the most in the S&P 500, the group’s first climb in four sessions, as all of the benchmark’s 10 main industries advanced. Staples are down 3.5% in past four weeks, worse than the S&P 500’s 1.3% retreat.

Coty Inc. jumped 19% to a record after a report that the Calvin Klein and Adidas fragrance maker won the auction for Procter & Gamble Co.’s haircare unit and two beauty lines in deals which could reach a combined $12 billion. P&G added 1.3%.

Aetna, Unitedhealth

Monster Beverage rallied 4.3%, the biggest gainer in the S&P 500, after Citigroup Inc. analysts added the company to the firm’s US Focus List. Campbell Soup Co. rose 2.4%, on track for its best rise in five months, while Whole Foods Inc. was headed for its biggest advance since April, up 1.7%. Coca-Cola Co. and PepsiCo. Inc. added at least 1%, with Coke posting its best increase in a month.

The health-care group climbed for the fifth time in six sessions. Perrigo Co. advanced 3.7% after Abbott Laboratories said it would vote its 14.5% stake in favor of Mylan NV’s $33 billion bid for Perrigo at a shareholder meeting on a potential deal in July or August. Mylan lost 2.3%, the most in a month.

UnitedHealth, Aetna and Anthem Inc. added at least 1.3% amid a drumbeat for consolidation in the health- insurance industry. Aeri Pharmaceuticals Inc. soared 48%, the most ever, after after US regulators let the company favorably alter the design of a trial for its glaucoma drug.

Airlines slip

SunEdison Inc. increased 2.6% after raising $402.5 million to help buy renewable energy plants in emerging markets. It also purchased more than 2 gigawatts of wind and solar projects in Central America and Asia.

Industrial shares were little changed as declines in airline shares weighed. American Airlines Group Inc., Southwest Airlines Co. and United Continental Holdings Inc. dropped more than 0.9%. A Bloomberg index of US carriers fell 1.2%.

Oshkosh Corp. slumped 8.3%, the biggest drop in almost 11 months. The maker of combat vehicles, heavy duty trucks and other equipment cut its third-quarter and 2015 profit view, citing severe weather and potential rental industry consolidation. United Rentals lost 2.6%, the most in the S&P 500, after it was downgraded to underperform from neutral at Macquarie Research.

Avalanche Biotechnologies Inc. shares tumbled 55%, the most since it went public last July, after some patients in a safety study of its gene therapy for an age-related chronic eye disease still required injections from another drug. Bloomberg

With assistance from Roxana Zega in Zurich and Annelise Alexander in New York.