Stocks kicked off February with a rally, energized by an earnings beat from ExxonMobil and a strong manufacturing report.
The Dow Jones Industrial Average rose 118.20, or 1.2% to close at 10,185.53, its biggest point and percentage gain since Jan. 4. The S&P 500 gained 1.4 percent and the tech-heavy Nasdaq added 1.1 percent.
Energy stocks were among the day's biggest gainers after Dow component ExxonMobil reported its profit fell 23 percent but still beat Wall Street estimates and oil pushed higher tonearly $75 a barrel.
Exxon shares advanced 2.7 percent, their biggest one-day gain since last July.
Meanwhile, the dollar snapped a four-day winning streakand gold ended above $1,104 a troy ounce.
Industrials were another strong performer today, with Alcoa and DuPont at the top of the Dow pack, after a stronger-than-expected ISM manufacturing report.
The ISM reported its manufacturing gauge jumped to 58.4, stronger than expected, in January. Any reading over 50 indicates expansion.
Separately, personal income and spending rose in December, while construction spending fell 1.2 percent in the final month of 2009.
But ISM was what the market responded to. One thing traders fixated on in the report: Norbert Ore, chairman of the group, said a reading of around 58 typically correlates to GDP growth of 5.5 percent.
Plus, the ISM reading followed strong manufacturing reports from India, China, South Korea and Australia. Economists expect Australia may raise rates tomorrow by a quarter of a percentage point.
Steve Grasso of Stuart Frankel cautioned that despite all of the global manufacturing news, the S&P hasn't broken 1,100 in two weeks.
"We haven't done that and that's worrisome to me," Frankel said on CNBC today. "Let the market prove itself above 1,100 in the S&P before you commit new capital." (Watch the video clip.)
The White House this morning revealed its 2010 budget, which showed the deficit likely to soar to $1.56 trillion this year, the highest since World War II, but falling to half that by the time President Obama's term ends in 2012. One takeaway from the report: The SEC's budget for policing Wall Street is being increased by 10 percent to $1.235 billion.
Financials got a boost from news that the proposed Volcker rule cracking down on banks may be dead on arrival after Sen. Richard Shelby, the ranking member on the Senate banking committee, came out against the rule. Shelby told the Financial Times that if Democrats push forward with the Volcker rule, they risk losing bipartisan support.
Among the other buzz in financials today was that Goldman Sachs CEO Lloyd Blankfein could get a bonus of up to $100 million for 2009.
And Morgan Stanley reportedly plans to hire several hundred tradersover the next few years.
Apple led gainers on the Nasdaq after sliding last week.
But Amazon weighed on the Nasdaq, logging its biggest decline since last July, after the company gave in to publisher Macmillanin a dispute involving e-book pricing. Macmillan wants to charge up to $14.99 for e-book versions of best sellers while Amazon had wanted to hold the line at its current price of $9.99.
Barnes & Noble shares shot up more than 18 percent following news that grocery magnate Ron Burkle sent a letter to the company, seeking permission to increase his stake in the company to as much as 37 percent without triggering a poison pill. Burkle's Yucaipa Companies currently owns an 18.7-pecent stake in the company.
Techs got a few votes of confidence from analysts: Chip maker AMD jumped 6 percent and the Philadelphia Stock Exchange semiconductor index rose more than 3 percent after JMP Securities upgraded its rating on AMD to "outperform" from "perform."
Research In Motion was upgraded to "buy" from "hold" by Standpoint Research as the BlackBerry maker continued to see subscriber growth.
Merriman Curhan started coverage of Palm at "neutral," saying the latest versions of the Pre and Pixi have revitalized the company.
And Oracle got an "outperform" rating and $30 price target from Credit Suisse, which sounded an optimistic note about company spending on business software this year.
But Macy's was downgraded to "hold" from "buy" by Deutsche Bank as consumers continue to favor discount chains over big department stores.
In other earnings news, Medicare provider Humana reported its profit jumped 44 percent, in line with expectations, but its shares lost more than 2 percent. And Gannett , publisher of USA Today and the Indianapolis Star, reported it swung to a profit as ad sales improved but the stock tumbled on the company's tepid outlook.
Toyota shares snapped a six-day losing streak after the Japanese auto maker officially announced a fix for the gas-pedal problem that triggered a massive recall of several Toyota model. It involves a shim that increases the tension on the pedal, thereby making it more difficult for it to stick.
Elsewhere in the auto sector, Indian mini car maker Tata Motors reported sales shot up 77 percent in January and electric car maker Tesla Motors is expected to launch its $100 million IPO this week.
Volume was light, with just over 1 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 4 to 1.
— Reuters contributed to this article.
MONDAY: Bank of America/Merrill Lynch trial begins; construction spending; ISM manufacturing index
TUESDAY: Academy Award nominees announced; Madoff liquidation hearing; Volcker, Geithner testify; pending-home sales; auto sales; Earnings from BP, UPS (preannouncement), ADP and News Corp.
WEDNESDAY: Weekly mortgage apps; Challenger and ADP job-cuts reports; ISM services index; weekly crude inventories; Fed's Warsh speaks; Earnings from Pfizer, International Paper, Time Warner, Cisco, Visa and Yum Brands
THURSDAY: Senate hearing on NBC-Comcast; Tea Party Convention; chain-store sales; ECB, BOE announcements; weekly jobless claims; factory orders; Earnings from GlaxoSmithKline, Vodafone, Kellogg, MasterCard, Northrop Grmman, Sony, Unilever and Burger King
FRIDAY: Earnings from Aetna and Tyson Foods
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