Techs, Financials Lead Rally; HP Skids

The market was in the mood for a rally Monday after last week's slide, determined not to let anything stand in the way.

Financials and technology stocks led the way, while a shift in the oil market put a cap on the top end of crude's new range.

The Dow Jones Industrial Average gained more than 130 points, or 1 percent, to close at 12876.31. The S&P 500 index climbed 1.1 percent, while the Nasdaq jumped 1.8 percent.

The price of crude swung wildly between $123 and $126 a barrel before settling at $124.23 a barrel on the New York Mercantile Exchange.

The past few weeks have seen oil go up about $10 in a week then fall back the next week, but always pushing the range higher. The rally last week left oil up just shy of $126 a barrel, which may be the top end of this current range.

“Oil has gone to where … future oil is worth less than current oil after holding costs, which put a bearish sentiment on the oil market,” said Michael Cohn, chief investment strategist at Atlantis Asset Management. "That’s essentially given the impression that commodities inflation is over temporarily … creating a rotation where they sell commodity stocks off and bring up the stuff that’s been hit badly," Cohn said.

For sure, there is more optimism in the market, but Cohn notes that rally volume is thin. “I really don’t expect this market to burst out of its seams,” he said.

The dollar relinquished earlier gains against the euro but eked out a gain against the yen .

Keeping a lid on the dollar's gains were comments from Chicago Federal Reserve Bank President Charles Evans, in response to a question about when the Fed would start raising rates again. "There continue to be downside risks to economic growth," Evans told reporters after a speech at a college in Illinois. "We're still muddling through this." That seemed to contradict comments during the speech that monetary policy was "accommodative" and "appropriate" and that U.S. growth should improve in the second half. Evans isn't currently a voting member of the Fed's Open Market Committee.

Still, there was no stopping today's stock rally -- not even when Wall Street titan Jamie Dimon, head of JPMorgan Chase, said the credit crunch may be ending but a recession could be just beginning.

Dave Rovelli, managing director of equity trading at Canaccord Adams, said he sees "no reason to chase stocks" right now, citing the market's 11-percent gain over the past 7-8 weeks and $125-a-barrel oil. But, when it's time to go back in -- which Rovelli pegs around 1370 in the S&P -- he recommends large-cap techs.

"Companies with a certain niche like RIMM, Apple or Google," Rovelli said, "that are outperforming everybody -- delivering products people really want," Rovelli said.

Global Showdown

Technology stocks were among the day's big gainers as traders cheered the next wave of cool gadgets. The tech-heavy Nasdaq outperformed both the Dow and the S&P 500.

American depositary shares of Research In Motion jumped 9.2 percent as the Canadian company's new BlackBerry received rave reviews. The device, known as the BlackBerry Bold, is the first 3G BlackBerry, which means global roaming, has features that make it easier to browse the Internet and download music, and has added processing power to better handle business applications.

The BlackBerry Bold is expected to debut this summer in Europe, when Apple's first 3G iPhone is set to launch. Apple shares gained 2.6 percent.

Shares of AT&T , which has exclusive U.S. carrier rights on the BlackBerry Bold, ticked up 1.4 percent.

EDS shares were halted after jumping 28 percent, pending news that Hewlett-Packard is close to buying the outsourcing tech-services firm for $12 billion to $13 billion. H-P confirmed the talks but said it's not a done deal.

H-P shares were halted after dropping 5.1 percent but didn't drag on the Dow amid broad-based blue-chip gains.

The play for EDS was said to be an attempt to give H-P a competitive edge with tech-services giant IBM , but shares of Big Blue gained 1 percent after the annoucement.

Sprint Nextel reported a wider quarterly loss as it lost high-value customers who pay monthly phone bills and commit to contracts of at least a year. The No. 3 U.S. mobile-service posted a loss of $505 million, or 18 cents a share, compared with a loss of $211 million, or 7 cents a share, a year earlier. Wall Street was expecting Sprint to turn a small profit of 2 cents per share. Shares fell 1.5 percent.

The financial sector gained 1.5 percent, as results from HSBC , Europe's biggest bank, eased concerns about the banking sector. HSBC reported its profit rose as growth in Asia and elsewhere helped counter another big hit for bad debts on U.S. home loans. The company took a bad debt charge of $3.2 billion during the quarter for its U.S. consumer finance business and wrote down almost as much for a deterioration in the value of risky assets amid the credit crunch.

Hard-hit bond insurer MBIA reported a stunning quarterly loss of $2.41 billion, or $13.03 a share, well above the 19 cents a share analysts had expected. The company attributed its poor performance to unrealized losses on insured derivatives.

MBIA shares bounced up 4.5 percent in what traders said was most likely short-covering. The same thing happened to Fannie Mae , though the proof was in the next day's pudding, when the stock resumed its decline.

Traders may also have been cheered by comments from MBIA's CEO, who said the company's balance sheet is set up to withstand credit stress levels many multiples of what we are experiencing now. The insurer also said quarterly revenue dropped less than it had initially reported.

Shares of rival Ambac