Stocks rallied Monday after a pair of encouraging reports on the manufacturing sector, strong bank earnings out of Europe and news that auto sales got a boost from the "Cash for Clunkers" program.
All three major indexes were up at least 1 percent and the S&P 500 was hovering around the 1,000 mark, the first time it's reached that level intraday since Nov. 5.
This came after stocks rose 1 percent last week, boosted by Friday's GDP surprise and encouraging regional reading on manufacturing.
The Institute for Supply Management reported its gauge of manufacturing activity rose to 48.9in July from 44.8 in June. Economists had expected a reading of 46.5. A measure of new orders jumped to 55.3, an encouraging indication of future activity as anything over 50 indicates expansion.
"Our propriety cyclical index says RECESSION IS OVER," FAO Economics' Robert Brusca wrote after the report, noting that most components of the ISM survey showed "outright gains."
And, all the encouraging global readings on manufacturing, including this morning's report from China, "are consistent with the onset of recovery and some point to a strong recovery," Brusca said.
"We call July the first recovery month," he said.
A separate report showed construction spending rose 0.3 percent in June — economists had expected a 0.6-percent drop.
Ford shares soared 10 percent ahead of its July sales report as the automaker gave a head's up this weekend that it would be its first positive sales report in two years, helped by the "Cash for Clunkers" program. Shares pared gains slightly after the automaker reported its sales rose 2.3 percent.
Other automakers are expected to show a significant boost from the program, which is running out of cash and may have to be suspendedif the Senate doesn't approve a bill to give the program an additional $2 billion in funding.
Natural-resource stocks got a boost as oil soared above $71 a barrel and steelmakers in particular got a boost from the "Cash for Clunkers" program as automakers ramped up production.
Alcoa, the biggest percentage gainer on the Dow, and AK Steel have both said they have benefited from the program.
Bank of America and JPMorgan rounded out the top three percentage gainers on the Dow as banks got a boost from strong earnings from Barclaysand HSBC.
Meanwhile, Bank of America has agreed to pay $33 million to settle charges by the SEC that it made false and misleading statements during the Merrill Lynch acquisition.
"The stock initially took a jolt" after the SEC news but "the fact that it's bouncing back seems like a sign of how strong the market is. It seems like news like that should rock the stock, but its not. That in itself, from how the market is treating it, indicates that the financials are stronger than we think."
One of the things that helped the stock bounce back was news that Bank of America has hired Sallie Krawcheck, the former CFO of Citigroup, to lead its global wealth and investment-management unit, as a prelude to finding a successor to CEO Ken Lewis.
And Goldman Sachs shares rose despite a report that showed the investment bank's reputation has been damaged, among both the general public and financially sophisticated Americans.
American depositary shares of UBS gained amid the likelihood that the Swiss bank won't pay a fineto settle its dispute with the US government over Americans suspected of trying to evade taxes by using Swiss accounts.
CIT Group jumped more than 10 percent following news that the lender has raised the offering price of on its debt repurchase, offering to pay $875 in cash for every $1,000 in senior notes due Aug. 17, from $825. The company also said it has already received enough offers to meet the minimum requirements of the program.
AIG shares fell following news that the insurer has chosen former MetLife CEO Robert Benmosche as its chief executive.
Apple and Google were in the spotlight this morning after Google CEO Eric Schmidt resigned from Apple's board.
Dow component 3M gained after Goldman Sachs upgraded the stock to "buy" from "neutral."
Later this week we'll get reports on the services sector, personal spending, chain-store sales and the big finale: The July jobs report on Friday.
MONDAY: Auto sales; Earnings from Pulte Home after the bell
TUESDAY: Personal income/spending; pending-home sales; Earnings from Kraft
WEDNESDAY: Weekly mortgage applications; Challenger, ADP reports on jobs; ISM services index; factory orders; weekly oil inventories; Earnings from P&G, Cisco, News Corp. and Prudential
THURSDAY: Chain-store sales; weely jobless claims; Earnings from Sirius XM, Unilever
FRIDAY: July jobs report; consumer credit; Earnings from Liberty Media
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