By Sue Chang and Anora Mahmudova, MarketWatch

Selling pressure expected to mount as S&P 500 nears 2,000

The S&P 500 on Monday rose for a fifth session in a row, its longest winning streak this year, as a string of economic data appeared to push back the timing of a Federal Reserve rate hike to 2016.

"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," he said.

The S&P 500 rose 35.69 points, or 1.8%, to 1,987.05, with all 10 sectors higher after health-care sector rebounded.

The Dow Jones Industrial Average added 304.06 points, or 1.9%, to 16,776.43, with only Nike Inc. (NKE) in the red.

The Nasdaq Composite advanced 73.49 points, or 1.6%, at 4,781.26, while the Russell 2000 gained 27.52 points or 2.5%, to 1,141.64.

The rally comes on the heels of one of the biggest reversals for stocks in four years (http://www.marketwatch.com/story/us-stock-futures-rise-ahead-of-jobs-data-that-could-usher-in-a-rate-increase-2015-10-02), when the market swooning from a weak jobs report turned sharply positive toward the end of Friday's close of trading.

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

"It is a case where bad [news] is good," said Kent Engelke, chief economic strategist at Capitol Securities Management. "Friday's jobs data was bad and the odds are rising that any change in monetary policy will not occur until 2016 with consensus now expecting March."

Indeed, the Fed-funds futures market on Monday was pricing in a 7% probability of a rate increase in October, down from 14% Thursday before the weak jobs report, according to the CME Group's FedWatch tool (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html).

Stocks had trimmed some of their gains earlier in the session 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.

John Manley, chief equity strategist at Wells Fargo Advantage Funds was cautiously optimistic about the market in the near term, and projected more upside potential as people to come off of the sidelines.

Engelke was a bit more specific. "There is a 65% chance that the market has turned the proverbial corner," he said.

However, selling pressure is expected to mount as S&P 500 climbs with initial resistance predicted at 2,000 points, according to Sal Arnuk, co-head of equity trading at Themis Trading.

In Asian markets (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)

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:Micron Technology Inc.(MU) rallied 10%, 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 17% this month but off 50% for the year.

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 7%.

Tenet Healthcare Corp.(THC) shares rallied 4.6% 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 8.3%, while Murphy Oil Corp(MUR) gained 5.1%.

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 5.3%.

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), which will unofficially kick off third-quarter earnings season on Thursday, soared 9.4%.

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 article.

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(END) Dow Jones Newswires

October 05, 2015 17:04 ET (21:04 GMT)

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