U.S. Stocks Add To Gains After Pending Home Sales Data

NEW YORK (MarketWatch) -- U.S. stocks climbed Monday as financial shares paved the way, with the sector bolstered by an $11.5 billion investment in Swiss banking giant UBS AG and investors riding a wave of optimism sparked by Tuesday's likely interest-rate cut.

The Dow Jones Industrial Average was up 85.9 points at 13,711.4, with 24 of its 30 components ahead, fronted by led by J.P. Morgan Chase , up 2.8%, and Citigroup Inc. , up 2%.

Elsewhere on the Dow, McDonald's shares were up 1.5% after the fast-food chain reported an 8.2% jump in global sales at restaurants open a year or more. .

The S&P 500 gained 10.17 points to 1,514.83 and the Nasdaq Composite gained 10.49 points to 2,716.65.

On the New York Mercantile Exchange, January-dated light crude oil gained $1.23 to $89.51 a barrel.

Elsewhere on the NYME, gold futures rose, with the contract for February delivery gaining $14.1 to $814.4 an ounce. .

Volume on the New York Stock Exchange neared 256 million shares, and advancing stocks outpaced those falling by more than 2 to 1. On the Nasdaq, 430 million shares exchanged hands, and advancers topped decliners 3 to 2.

For sale

The major indexes extended their gains after the National Association of Realtors reported its gauge of future home sales increased 0.6% in October, the second consecutive rise.

"The data are of interest, but ahead of tomorrow's Fed decision and more important economic reports later in the week, there won't be much market reaction," said analysts at Action Economics.

Investors looked ahead to Tuesday's rate decision by the Federal Reserve, debating whether to expect a quarter-point or half-point reduction.

If expectations of another Fed rate cut are realized, it would be the third meeting straight in which the central bank has opted to make such a move. .

Active issues

Trading was halted in shares of bond insurer MBIA Inc., which have fallen more than 50% so far this year, pending the release of news. MBIA shares were up 0.5% before they were stopped.

Swiss banking giant UBS warned it would write down the value of its subprime mortgage holdings by another $10 million, potentially wiping out its profits for the year.

At the same time, the bank said it would get a capital injection of $11.5 billion from the government of Singapore and an unnamed investor in the Middle East.

European shares turned higher, with construction firms drawing a lift from Lafarge's deal-making plans. .

Asian stocks fell, with markets in Hong Kong leading the region lower. .

By Kate Gibson