Stocks advance on China data amid American budget talks

Stock prices traded slightly higher Monday ahead of a two-day meeting of the Federal Reserve Board.

The Dow Jones Industrial Average gained 14.75 points to 13,169.88. The Nasdaq Composite Index was up 8.92 points to 2,986.96, and the S&P 500 Stock Index eked out a gain of 0.48 point to 1,418.55.

The Fed will hold its last meeting of 2012 on Tuesday and Wednesday to review the economic and employment situation. It is unlikely the Federal Open Market Committee will make any significant changes in its first meeting after the presidential election.

Oil fell for the fifth consecutive day Monday, falling 37 cents to $85.56 a barrel. However, gold rose $8.90 to $1,714.40 an ounce.

McDonald’s Corp. (NYSE: MCD), the largest restaurant chain, added 1.1 percent as its November sales rose 2.4 percent globally. Cliffs Natural Resources Inc. (NYSE: CLF) and Newmont Mining Corp. (NYSE: NEM) rose at least 1.5 percent to pace gains in commodity producers.

“China hit that trough and is starting to see an acceleration of growth,” said Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, N.Y. “As far as our market goes, I don’t think there’s anything out there right now. It’s waiting on the politicians.”

China’s stocks rose the most among Asian equity markets Monday as the Shanghai Composite Index jumped to a four-week high after factory output and retail sales data beat economists’ estimates. U.S. equities fell earlier Monday as Italian Prime Minister Mario Monti said he lost support and will resign.

In the United States, lawmakers from both parties are leaving rhetorical room for a split-the-difference agreement with President Barack Obama on a U.S. budget deal. The president and House Speaker John Boehner met one-on-one Sunday at the White House, with representatives for the two leaders offering no details of the negotiations, yet issuing identical statements afterward that “the lines of communication remain open.”

McDonald’s added 1.1 percent to $89.41. Analysts projected a gain of 0.2 percent for sales at stores open at least 13 months, the average of 14 estimates compiled by Consensus Metrix. Sales in the United States increased 2.5 percent, the company said in a statement. Analysts anticipated a drop of 0.6 percent.

Commodity shares gained. Cliffs Natural added 4.6 percent to $30.86. Newmont Mining increased 1.6 percent to $45.11.

Comtech Telecommunications Corp. (Nasdaq: CMTL) climbed 3.9 percent to $25.06. The satellite equipment maker that derives about half its revenue from the U.S. government rose after a rating upgrade by JPMorgan Chase & Co. (NYSE: JPM).

American International Group Inc. (NYSE: AIG) lost 2.3 percent to $33.36. The company will make a capital contribution of $1 billion to its U.S. property-casualty subsidiaries, the New York-based insurer said. Sandy’s cost was about $2 billion before tax, AIG said.

The S&P 500 Retailing Index dropped 1.5 percent in the biggest decline among 24 groups. Inc. (Nasdaq: PCLN) retreated 5 percent to $625.96. The online travel service was downgraded to "hold" from "buy" at Deutsche Bank AG by equity analyst Ross Sandler. The 12-month share-price estimate is $710.

Options traders are sending bearish contracts on Dell Inc. (Nasdaq: DELL) to the lowest level in seven years, reducing hedges after the stock plunged 29 percent this year and the third-biggest personal computer maker took steps to expand into new businesses.

Puts protecting against a 10 percent decline in the shares cost 0.98 point more than calls betting on a 10 percent gain, based on three-month data compiled by Bloomberg. The price relationship known as skew reached 0.38 on Nov. 15, the lowest since August 2005. While Dell shares have climbed 18 percent since reaching a 3 1/2-year low on Nov. 16, the stock is trading near its cheapest level compared with analysts’ profit estimates since 2009.

Dell is expanding with acquisitions in other businesses as customers turn to smartphones and tablets and demand for PCs declines. Goldman Sachs Group Inc. (NYSE: GS) last week recommended buying the shares on speculation the company may be acquired.

Dell is buying companies that are “very high-margin, very high-growth,” said Brian Frank, a money manager at Frank Capital LLC, which oversees $25 million. The New York-based investment firm has 3.2 percent of its assets in Dell, making the stock its ninth-largest holding, according to Frank.

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