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S&P extends gains after milestones; economy doing ‘phenomenally well’

The Standard & Poor’s 500 Index rose Monday, approaching a third straight yearly advance and extending gains after equity gauges climbed past milestones last week.

Gilead Sciences Inc. increased 3.7 percent as biotechnology shares rebounded for a third day. Energy companies rose despite a drop in crude prices. Losses in Microsoft Corp., Intel Corp. and IBM Corp. weighed down the Dow Jones industrial average.

The S&P 500 rose 0.1 percent to 2,090.57. The Dow fell 15.48 points, or 0.1 percent, to 18,038.23. The Russell 2000 Index gained 0.3 percent. More than 4.7 billion shares changed hands on U.S. exchanges, 32 percent below the three-month average. Volume for U.S. exchanges on Dec. 26 was the lowest this year for a full day of trading.

Equities are approaching the end of the year at record levels, bolstered by the fastest expansion for the American economy in more than a decade. The Federal Reserve’s pledge on Dec. 17 to be patient in raising interest rates helped the S&P 500 fully recoup a 5 percent loss in the first half of the month.

“There’s lots for investors to digest going into 2015,” said James Buckley, who helps oversee about $47 billion as a portfolio manager at Baring Asset Management Ltd. in London. “The focus will likely be on more macro-type events immediately. The U.S. economy is the one real bright spot. That economy is doing phenomenally well. That in itself is reason to be optimistic.”

The S&P 500 has gained 13 percent this year, while the Dow is up 8.8 percent in 2014 after climbing above 18,000 for the first time last week. The Russell 2000 of small-cap stocks climbed to an all-time high on Dec. 26. The Nasdaq Composite Index reached its highest since March 2000 that same day, closing about 5 percent below its record.

U.S. stocks have overcome upheavals in 2014 that threatened to derail a bull market in its sixth year, ranging from violence in the Ukraine to an Ebola outbreak and a bear market in oil prices. The S&P 500’s worst retreat was only 7.4 percent, and the gauge recovered from each of its declines of 4 percent or more within one month.

The S&P 500 has not seen a four-day decline since December 2013. The benchmark gauge has declined for four consecutive trading sessions at least once every year since at least 2000.

The S&P 500 trades at 18.5 times profits, the highest level since 2010 and compares with the average of 16.3 over the past decade.

Analysts forecast earnings for the S&P 500 to increase 6.4 percent next year. Consumer-discretionary, technology and raw-materials companies are expected to post the fastest growth, with profits rising at least 13 percent, estimates compiled by Bloomberg show.

Economic reports this week may show consumer confidence climbed in December, pending home sales rose in November, while an Institute for Supply Management index of manufacturing slipped this month, according to economists surveyed by Bloomberg.

Gilead Sciences Inc. rose 3.7 percent as biotechnology shares gained for a third day after the biggest two-day drop since February 2012.