Wall Street higher as investors await key economic data

By Tanya Agrawal

REUTERS - Wall Street kicked off the last month of the year on a positive note as investors look out for key economic data and policy decisions by central banks.

Stocks pared early gains after data showed the U.S. manufacturing sector contracted in November, falling to its worst levels since June 2009.

The Institute for Supply Management (ISM) said its index of national factory activity fell to 48.6, the first time the index went below 50 since November 2012. A reading below 50 indicates contraction in the manufacturing sector.

"It was surprisingly poor and I think coming on the heels of the Chicago PMI it suggests the stronger dollar was starting to gnaw at the U.S. economy," said Joe Manimbo, senior market analyst, Western Union Business Solutions, Washington.

However, other data showed U.S. construction spending rose to a near eight-year high, suggesting the economy remains on firmer ground despite some slowing in consumer spending and persistent weakness in manufacturing.

Investors are keeping an eye on data for clues regarding the health of the U.S. economy that might enable the Federal Reserve to raise interest rates for the first time in nearly a decade.

"Perhaps we'll still get a rate hike from the Fed this month, but maybe the Fed will underscore how it's likely to move gradually in raising interest rates," Manimbo said.

Chicago Fed President Charles Evans is scheduled to speak at an event at 12:45 p.m. ET. (1645 GMT). Evans is a voting member of this year's Federal Open Market Committee. Chair Janet Yellen is scheduled to speak on Wednesday and Thursday.

The main data this week is the November employment report, which is expected to show that the economy added 200,000 jobs during the month. Analysts say a strong report virtually guarantees a rate rise this month.

Investors are also awaiting a European Central Bank meeting on Thursday, when the central bank is widely expected to ramp up its trillion-euro bond-buying program.

At 12:27 p.m. ET (1627 GMT) the Dow Jones industrial average was up 110.45 points, or 0.62 percent, at 17,830.37, the S&P 500 was up 13.26 points, or 0.64 percent, at 2,093.67 and the Nasdaq Composite was up 29.61 points, or 0.58 percent, at 5,138.28.

All 10 major S&P sectors were higher with the health index's 1.08 percent rise leading the advancers.

Alphabet Class C and Class A shares were up about 2.5 percent and gave the biggest boost to the S&P and the Nasdaq.

TerraForm Power rose 22.3 percent to $8.44 after hedge fund Appaloosa Management sent a letter to the company, saying its move to buy higher-risk projects from the parent company, SunEdison, raises concerns for TerraForm's stakeholders. SunEdison was up 6.8 percent at $3.40.

Joy Global fell 13.9 percent to $13.22 after Streetinsider.com said Bank of America Merrill Lynch slashed its rating on the stock.

Mattress Firm Holding was up 6.5 percent at $52.58, a day after the company agreed to buy HMK Mattress Holdings, the owner of mattress retailer Sleepy's.

Advancing issues outnumbered decliners on the NYSE by 1,876 to 1,080. On the Nasdaq, 1,406 issues fell and 1,317 advanced.

The S&P 500 index showed 21 new 52-week highs and 3 new lows, while the Nasdaq recorded 87 new highs and 49 new lows.

(Reporting by Tanya Agrawal; Editing by Don Sebastian)