Stocks opened higher Monday as investors were cheered by news of a deal that will avoid bankruptcy for commercial lender CIT Group and a better-than-expected start to earnings season.
CIT Group has cut a deal with key bondholders for $3 billion in rescue financing, helping it to avoid a bankruptcy filing. A formal announcement is expected shortly.
The deal is at a high interest rate — 10 percent — and doesn't completely solve CIT's problems but it buys the company some time. And, it was encouraging for investors because it shows lending is loosening up — and it's from the private sector, not the government.
CIT shares soared about 80 percent, adding to their 70-percent gain from Friday, to push the stock above the $1 mark.
Giving stocks a little extra juice a half-hour into trading: Leading indicators rose for a third straight month, suggesting the recession may be winding down. Leading indicators rose 0.7 percentin June, following a upwardly revised 1.3-percent gain in May, the Conference Board reported. Economists had expected a more modest gain of 0.5 percent.
"The recession has been losing steam since the spring, although very large job losses continue," Conference Board Economist Ken Goldstein said in a statement. "If these trends continue, expect a slow recovery this autumn," he said.
A separate NABE survey of economists showed the recession appears to be easing but isn't over yet.
"Industry demand was still declining in the second quarter of 2009, but the breadth of decline had narrowed considerably since late 2008, raising prospects for stabilization in the second half" of the year, Sara Johnson, managing director of global macroeconomics for IHS Global Insight, told Reuters.
This comes after Wall Street logged its best week since early Marchlast week, with stocks up more than 7 percent, as earnings season got off to a better start than expected. IBM, GE and Bank of America all beat expectations when they reported last week.
Earnings Go Kit
- Biggest S&P Earnings Surprises To-Date
- Earnings Offer Market a Glimmer of Hope—for Now
- Corporate Cost-Cutting: Will Early Gain Turn to Pain?
- Complete Earnings Coverage: The Latest Reports, Video and More
Earnings are light today, but will pick up as the week goes on, with reports from Caterpillar , Coca-Cola, Merck, Apple , Boeing, Ford, American Express and Microsoft , among others.
In all, about a third of the S&P — and half the Dow — report this week.
Among this morning's reports: Oilfield-services leader Halliburton said second-quarter profit fell 48 percent on weakness in exploration and production activity. But the 30 cents per share earnings appeared to narrowly beat analyst estimates.
And toymaker Hasbro said its profit rose 5 percenton the strength from G.I. Joe and Transformers sales that were tied to summer movie releases.
After the bell, we'll get the latest from Texas Instruments , as well as Boston Scientific , Legg Mason , and Zions Bancorp .
Monday's economic calendar is relatively light, although we will get the Conference Board's index of leading economic indicators at 10 am New York time, with economists expecting to see a rise of 0.5 percent for June.
Atlanta Fed President Dennis Lockhart will speak on the latest economic outlook in Nashville, Tennessee at 1:30 pm.
GlaxoSmithKline was up as the drug maker and Human Genome reported positive results for a late stage study of a new lupus drug - the first new treatment for that disease in decades.
We could also see some positive movement for shares of Linux provider Red Hat — it will replace CIT Group in the S&P 500 after the close of trading Friday July 24.
— Peter Schacknow, CNBC Senior Producer, contributed to this report