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Stocks Add to Gains Before Close

Stocks continued to add to gains Monday in a broad-based rally that pushed stocks to new levels, although trading volume remained thin.

The Dow Jones Industrial Average was up more than 150 points after eking out a gain last week.

Most Dow components were higher, led by American Express ,JP Morgan , and Home Depot . Cisco fell.

The S&P 500exceeded 1,140, breaking through the crucial 1,130 barrier that has capped the index's highs since mid-May. The Nasdaq was also up. And the CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 21.

The 10 key S&P sectors were all higher, led by financials, consumer discretionary, and energy.

The move to higher levels probably reflects "a sense that the economy is not as bad as some of the 'double-dippers' have been saying," said Tom Schrader, managing director for U.S. Equity trading at Stifel Nicolaus Capital Markets.

Schrader noted oil markets have been strong all day, which typically indicates strength in the economy. Oil edged above $75 a barrel.

The market also may be moving higher for technical reasons. Once the S&P 500 broached about 1,134, 25,000 E-mini S&P 500 futures contracts traded, a signal a technical "buy" signal may have been triggered, he added.

Earlier on CNBC, Art Cashin, director of floor operations at UBS financial services said that the S&P 500's move above the 1,130 level could spark a "stampede of short-covering."

Financials as a whole were strong all day, and American Express led the blue-chip index after Bank of America Merrill Lynch said it established a position in the financial services firm after upgrading the consumer finance sector to "overweight" from "equal weight," because of a faster-than-expected drop in credit-card charge-offs.

Financial giants JPMorgan and BankofAmerica also rose.

Among retailers, Office Depot soared more than 10 percent after Janney Capital Markets said the company is in a good position to benefit from an economic recovery, and reaffirmed the office supply retailer's "neutral" rating.

Gap, meanwhile, rose after Goldman removed the clothing retailer from its "Americas sell list," and raised its rating on the stock to "neutral," citing sales growth.

Best Buy rose after Oppenheimer raised its rating on the electronics retailer to "outperform" from "perform" and increased its price target to $38 from $45, saying the company would benefit from new products during the holiday shopping season, and from its relationship with Apple.

Apple , meanwhile, also advanced after Kaufman Brothers raised its price target for the electronics maker to $374 from $350, citing sales momentum for the iPad.

Shares of Netezza soared after IBM announced it would buy tech analytics and data warehouse firmfor $1.78 billion, or $27 a share. Rivals Teradata and CommVault Systems also jumped.

Cisco was among the only Dow components to slip Monday, but the tech bellwhether may be experiencing profit taking after rising 6 percent last week, the best performance among all Dow stocks.

Nu Horizons Electronics , meanwhile, soared more than 100 percent after Arrow Electronics announced it would acquire the electronics distributor for about $128 million, or $7 a share.

Telecoms were raised to "overweight" from Credit Suisse, which said the sector should trade at a premium to the S&P 500 for up to five years. AT&T rose after Credit Suisse raised the telecom giant to "outperform" from "neutral."

Rival Verizon also rose after the Dow component named Lowell McAdam as the company's president and chief operating officer. McAdam is scheduled to take up the new position on Oct.

Steel stocks were mixed after Goldman Sachs upgraded Freeport McMoran to "buy" from "neutral," citing its copper business, while downgrading U.S. Steel and Nucor to "neutral" from "buy," as steel prices remain "range bound."

International Paper, and Packaging Corp. of America tumbled after brokerage BMO cut the paper and forest products sector to "market perform," from "outperform."

On the earnings front, Lennar shares rose after the homebuilder posted a quarterly profit that was better than expected, due to orders placed before the homebuyer tax credit expired. Other homebuilders including Beazer Homes , Hovnanian Enterprises and M/I Homes were higher.

And Discover Financial rose after the credit-card provider reported a higher-than-expected profitas charge-offs fell and consumers spent more on their credit cards.

Shares of BP rose after the oil firm confirmed it capped the leaking oil wellin the Gulf of Mexico. BP also said compensation claims related to the spill had jumped since it passed control to an independent administrator.

Gold hit record highs near $1,283 an ouncefor the fourth day, although it settled at $1,279. Gold has been boosted by growing expectations for U.S. interest rates to remain exceptionally low as the economy struggles, while silver came in sight of 30-year peaks.

At midday Monday, President Obama spoke to a cross-section of Main Street, Wall Street and Washington gathered at a CNBC-sponsored town hall (Click here for full coverage).

Obama defended his administration's record toward business while simultaneously deriding his critics as being politically motivated and saying he would work toward "setting a better tone" in Washington.

The president spoke not long after the National Bureau of Economic Research proclaimed an end to the recession. But Obama acknowledged that times are still tough.

"Obviously for the millions of people still out of work, people who have seen their home values decline, people struggling to pay their home bills every day, it's still very real for them," Obama said.

In the day's economic news, a monthly survey by the National Association of Home Builders and Wells Fargo indicated sentiment among U.S. home builders was unchanged in September.

More news on the housing market will be released this week, with housing starts on Tuesday, existing home sales data on Thursday, and new home sales data on Friday.

Also, the Federal Open Market Committee is scheduled to hold a one-day policy meeting Tuesday that could provide insight on the Federal Reserve's next moves.

On Tap for Next Week:
TUESDAY: Housing starts; FOMC Announcement; Clinton Global Initiative; MasterCard annual meeting; Earnings from AutoZone and Adobe
WEDNESDAY: Weekly mortgage applications; oil inventories; Wall Street & Washington Conference; Earnings from General Mills and Bed Bath & Beyond
THURSDAY: Weekly jobless claims; existing home sales; leading indicators; Chicago Fed President Evans speaks; Volcker speaks; FCC meeting on opening up new airwaves; Earnings from Rite Aid and Nike
FRIDAY: Durable goods orders; New home sales; Richmond Fed President Lacker speaks; Philadelphia Fed President Plosser speaks; NY Film Festival; Earnings from KB Home

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