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Stocks rallied to their highest closes since November Monday following encouraging economic reports from the U.S. and abroad and following news that auto sales got a boost from the "Cash for Clunkers" program.
The S&P 500 gained 1.5 percent to close at 1,002.63, the first time the S&P has closed above 1,000 since Nov. 5. The number is not only psychologically important but also technically: It puts the index up 50 percent from its March 6 low of 666.
The Dow Jones Industrial Average rose 1.3 percent to close at 9,286.56, the first time the Dow finished above 9,200 since Nov. 5.
The Nasdaq gained 1.5 percent to close at 2,008.61, a level it hasn't seen since early October.
This came after stocks rose 1 percent last week, boosted by Friday's GDP surprise and encouraging regional reading on manufacturing.
Today brought an encouraging national reading: The Institute for Supply Management reported its gauge of U.S. manufacturing activity rose to 48.9 in July from 44.8 in June. Economists had expected a reading of 46.5. A measure of new orders jumped to 55.3, an upbeat sign 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.
This came after a report out of China that showed manufacturing activity there expanded for a fourth straight month. Here, we're just working toward expansionary mode — when the index crosses 50 — but in China, they've been there for four straight months.
Ford [F
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] shares rose 4.1 percent after the automaker reported its first positive sales report in two years, helped by the "Cash for Clunkers" program. The stock had been up as much as 10 percent before the report.
Other automakers also showed a significant boost from the program, which is running out of cash and may have to be suspended if 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 [AA
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] and AK Steel have both said they have benefited from the program. Alcoa shares rose 7.2 percent, making them the biggest percentage gainer on the Dow.
Bank of America [BAC
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] was the biggest percentage gainer after Alcoa, climbing 3.6 percent, as banks got a boost from strong earnings from Barclays and 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 0.5 percent 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 4.9 percent amid the likelihood that the Swiss bank won't pay a fine to settle its dispute with the US government over Americans suspected of trying to evade taxes by using Swiss accounts.
CIT Group [CIT
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] jumped 18 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 [AIG
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] rose 3.5 percent following news that the insurer has chosen former MetLife CEO Robert Benmosche as its chief executive.
Apple [AAPL
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] and Google [GOOG
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] were in the spotlight this morning after Google CEO Eric Schmidt resigned from Apple's board.
Dow component 3M [MMM Loading... ()] gained 2.3 percent after Goldman Sachs upgraded the stock to "buy" from "neutral."
And IBM [IBM Loading... ()] rose 1.7 percent after Bernstein raised its price target on the stock.
Volume was below average, with 1.21 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, 5 to 1.
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.
This Week:
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; weekly jobless claims; Earnings from Sirius XM, Unilever
FRIDAY: July jobs report; consumer credit; Earnings from Liberty Media
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Data is a real-time snapshot *Data is delayed at least 15 minutes