Stocks Rally on Budget Talk Hopes

Stocks rallied on Monday, as investors were encouraged by the early tone in talks to tackle the U.S. fiscal crunch and by data that showed an advance in the housing sector’s recovery. The Dow Jones industrial average rose 207.65 points, or 1.65 percent, to 12,795.96 . The S&P 500 Index gained 27.01  points, or 1.99 percent, to 1,386.89 . The Nasdaq Composite added 62.94 points, or 2.21 percent, to 2,916.07.

President Barack Obama and House Minority Leader Nancy Pelosi (D., Calif.) expressed optimism Sunday that a deal can be reached to avert the “fiscal cliff” automatic spending reductions and tax hikes slated to take effect Jan. 1.

The pace of sales for previously owned homes rose in October, despite the devastation of Superstorm Sandy, in the latest sign of improvement for the long-battered housing market. Existing home sales rose to an annual rate of 4.79 million, seasonally adjusted, the National Association of Realtors reported on Monday.

Hostess Brands Inc agreed in court on Monday to enter private mediation with its lenders and leaders of a striking union to try to avert the liquidation of the maker of Twinkies snack cakes and Wonder Bread.