By Anora Mahmudova and Barbara Kollmeyer, MarketWatch

But strategist says watch for 'Bearmageddon'

U.S. stocks maintained their upside momentum on Monday and are poised for a five-session winning streak as worries about an imminent Federal Reserve interest rate hike have faded following a string of tepid economic data releases.

The S&P 500 rose 28 points, or 1.5%, to 1,979, with healthcare the only one of 10 sectors trading lower.

The Dow Jones Industrial Average added 239 points, or 1.5%, to 16,711, with only three stocks--Apple Inc. (AAPL), Nike Inc. (NKE) and UnitedHealth Group Inc.(UNH)--in the red.

The Nasdaq Composite advanced 50 points, or 1.1%, at 4,758, while the Russell 2000 gained 18 points or 1.7%, to 1,133.

"I would classify today--and the reversal last Friday--as a change in the perception of the location of risk," said Ian Winer, director of equity trading at Wedbush Securities. "The market decided Friday morning at 10:30 a.m. that pushing a rate rise out and keeping the easy money policies of this Central Bank was the most important cue on how to invest than the fundamentals of the economy."

The September jobs report, released Friday, was weaker than projected (http://www.marketwatch.com/story/us-economy-creates-just-142000-new-jobs-in-september-2015-10-02), fueling speculation that the Federal Reserve may be more circumspect about tightening monetary policy.

Earlier Monday, stocks had trimmed some of their gains after the Institute for Supply Management's nonmanufacturing index, a measure of the services side of the economy, came in lower than expected at its lowest readings since June (http://www.marketwatch.com/story/ism-services-index-slows-to-below-forecast-569-reading-2015-10-05). But stocks bounced back quickly.

"Market expectation is for continuation of zero interest rates and monetary stimulus from other central banks, which usually benefits equities," Kate Warne, investment strategist at Edward Jones.

Warne said stocks are likely to end the year in positive territory but said investors should scale down their expectations. "Investors should not expect big gains this year and the next few months will be volatile," Warne said.

Nonetheless, a Federal Reserve official said an interest-rate increase could still happen this year even as labor-market weakness spurred speculation the U.S. central bank won't hike until 2016.

In Asian markets Monday (http://www.marketwatch.com/story/china-stimulus-hopes-push-hong-kong-shares-higher-2015-10-05), the Nikkei 225 index gained 1.6%, while the Hong Kong Hang Seng Index surged 1.6%. In Europe, the Stoxx Europe 600 jumped 2.7%.

A downgrade from the World Bank for China fueled some stimulus hopes for that country (http://www.marketwatch.com/story/china-stimulus-hopes-push-hong-kong-shares-higher-2015-10-05).

Investors were also eyeing a sweeping Trans-Pacific Partnership trade agreement, which was announced Monday morning (http://www.marketwatch.com/story/us-reaches-trade-deal-with-11-pacific-nations-2015-10-05-81032225). The trade deal between the U.S. and 11 countries around the Pacific is expected to lower barriers to goods and services (http://www.marketwatch.com/story/trans-pacific-partnership-trade-deal-nears-agreement-2015-10-05).

Read: U.S. reaches trade deal with 11 Pacific nations (http://www.marketwatch.com/story/us-reaches-trade-deal-with-11-pacific-nations-2015-10-05-81032225)

'Bearamageddon' fears: Some strategists doubt U.S. stocks can keep up their upside momentum. Michael O'Rourke, chief market strategist at JonesTrading, said in a note that momentum and short covering were likely the only reasons the market rallied on Friday.

"The problem is that absent a change in the fundamental drivers behind the weekend, momentum and short covering only takes the market so far," he wrote. And when the S&P 500 is rallying alongside the dollar index, continued O'Rourke, investors should "question the validity of the move."

Jones said any further deterioration of economic data should put investors on "Bearmageddon watch--looking for indications the economy is rolling over while Fed policy is trapped at the zero bound."

Rosengren says a hike still in play: In an interview with MarketWatch (http://www.marketwatch.com/story/embargoed-until-1201-am-monday-2015-10-05), Boston Fed President Eric Rosengren said the September employment report was "weak," but by itself doesn't preclude a rate increase. The central bank will need to see if it was a one-off, or more of a "broader pattern," he said.

"If this is an anomalous report, then, if the data came in sufficiently, I would be comfortable possibly raising rates by the end of the year," said Rosengren.

Read: Poor jobs report puts dark cloud over U.S. economy (http://www.marketwatch.com/story/poor-jobs-report-puts-dark-cloud-over-us-economy-2015-10-04)

Stocks to watch:Tenet Healthcare Corp.(THC) shares rallied 3.7% after an article in Barron's indicated the company may be on the road to recovery.

Among big gainers on the S&P 500 were oil companies, which benefited from rising oil prices.

Marathon Oil Corp. (MRO) climbed 7.3%, while Murphy Oil Corp(MUR) gained 6.5%.

American Apparel Inc.(APP) filed for bankruptcy protection on Monday (http://www.marketwatch.com/story/american-apparel-could-file-for-bankruptcy-as-soon-as-monday-2015-10-05). The struggling clothing retailer plans to restructure debt, but wouldn't say whether stores would close.

Activist shareholder Nelson Peltz's Trian Fund Management LP said it has accumulated a $2.5 billion stake (http://www.marketwatch.com/story/activist-firm-trian-takes-25-billion-stake-in-general-electric-2015-10-05) in General Electric Co.(GE), making it one of the company's top shareholders, with around a 1% stake. GE shares jumped 4.1%.

Twitter Inc.(TWTR) has named Jack Dorsey chief executive officer (http://www.marketwatch.com/story/twitter-names-jack-dorsey-ceo-bain-coo-2015-10-05), but says he won't be chairman. Twitter shares rose 5.7%.

Shares of mining and commodities giant Glencore(GLEN.LN) (GLEN.LN) surged as much as 71% in Asia, then added another 21% (http://www.marketwatch.com/story/glencore-jumps-68-in-five-days-for-two-week-high-2015-10-05) in Europe amid asset-sale speculation (http://www.marketwatch.com/story/glencore-jumps-ftse-100-gains-for-fourth-day-2015-10-05).

Also read: Glencore oil deals could bite banks (http://www.marketwatch.com/story/glencore-oil-deals-could-bite-banks-2015-10-05)

Alcoa Inc.(AA) will unofficially kick off third-quarter earnings season on Thursday (http://www.marketwatch.com/story/pepsi-alcoa-shift-focus-to-results-as-corporate-earnings-season-begins-2015-10-04). Ahead of that, PepsiCo. Inc.(PEP) will report on Tuesday.

Micron Technology Inc.(MU) rallied 11%, up for a second session (http://www.marketwatch.com/story/micron-extends-gains-in-wake-of-better-than-expected-earnings-2015-10-05), after the chip maker reported better-than-expected fiscal fourth-quarter earnings last week. The stock is up 18% this month but off 50% for the year.

Other markets: The ICE U.S. Dollar index edged up 0.3% while oil prices rose 2.5% to $46.67. Gold fell. Chinese markets were closed for a holiday.

-- Barbara Kollmeyer contributed to this report.

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(END) Dow Jones Newswires

October 05, 2015 13:28 ET (17:28 GMT)

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