Dow Logs Biggest Gain in Over 2 Months

Sell in May and go away?

Not today.

Stocks advanced on this first trading day of May after some positive U.S. economic reports and details of a European financial rescue package for Greece.

The Dow rose more than 140 points, or 1.3 percent, its biggest gain since the middle of February, to close at 11,151.83.

The biggest gainers were Caterpillar , Boeing and American Express .

The S&P 500 gained 1.3 percent and the Nasdaq advanced 1.5 percent. The CBOE volatility index, widely considered the best gauge of fear in the market, fell 9 percent to just above 20.

So, does this mean the "sell in May and go away" strategy won't occur this year?

"It's a little early to make the 'sell in May and go away' call," said Alan Gayle, senior investment strategist at RidgeWorth Investments. While Gayle thinks the market has the potential to rally further, he said the risk of earnings disappointment may increase over the next few quarters.

"We’ve had a substantial rally and we believe that the market is going to be more selective as the focus turns to revenue growth over merely earnings growth and the risk of a disappointment has increased," he added.

The Institute for Supply Management reported its manufacturing index rose to 60.4 in April from 59.6 in March, its fastest pace in nearly six years.

Industrials were among the day's best performers, but materials stocks such as Alcoa and ExxonMobil skidded as the dollar gainedfollowing the ISM report.

Shares of BP lost nearly 4 percent, after sliding 12 percent last week, as the Gulf of Mexico oil spill continued to spread, with cleanup costs likely to exceed $14 billion. Analysts say BP will be on the hook for as much as $7 billion.

Oil topped $86 a barrel, gaining for a fourth session, supported by positive economic reports and concerns about the oil spill in the Gulf of Mexico. Gold hit another 2010 high, settling above $1,180 an ounce.

Shares of gold companies such as Barrick Gold, AngloGold and NewmontMining fell.

Consumer-discretionary stocks were also a leader today, along with financials, which got a boost after Warren Buffett defended Goldman Sachs over the weekend, saying the bank's behavior does not warrant public fury.

Goldman shares rebounded today, after sliding nearly 10 percent last week, leading an aggressive market selloff on Friday.

JPMorgan was up more than 2 percent while Bank of America and Citigroup were each up about 1 percent.

Buffett also presented an upbeat outlook for the U.S. economy, among a number of other comments.

Among other economic indicators: Construction spending rose 0.2 percent in March, less than expected, while consumer spending rose for a sixth straight monthin March and household savings fell to a 1-1/2-year low.

European countries agreed to an aid packageworth 110 billion-euro ($146.5 billion) for Greece, the biggest-ever bailout of a country. The ECB said it would accept all bonds— even junk-status — as security for loans.

Ford shares rose more than 2 percent after the auto maker posted a 25 percent increasein its April U.S. sales.

Most other major auto makers, including Chrysler and General Motors, reported April sales were up 20 percent or more.

Apple got a boost following news that the company sold 1 million iPads in less than a month.

Semiconductor shares such as Texas Instruments, Sandisk and Qualcomm saw a pop after reports that worldwide semiconductor sales rose 58 percentin March from a year earlier, driven by strong demand in the computing and communications markets, according to the Semiconductor Industry Association.

“What we’ve seen in this cycle is rather interesting—investors are not getting carried away by overpaying for the sector and that’s what keeps us bullish,” said Doug Freedman, senior semiconductor analyst at Broadpoint AmTech. “The sector continues to trade at a discountto the S&P 500.”

In merger news: United Airlines Parent UAL and Continental Airlines have made their merger officialin a $3 billion stock-swap deal.

And, there could be a bidding war in the rental-car line: Avis Budget said it intends to make a higher offer for Dollar Thrifty than one by rival HertzGlobal.

Avis and Hertz shares fell while Dollar Thrifty jumped almost 15 percent.

Johnson & Johnson shares rose despite the firm's consumer division announcing a broad recall of products late last Friday, including certain liquid infant's and children's Tylenol, Motrin, Zyrtec, and Benadryl products.

The Wall Street Journal reports that General Growth Properties is favoring the bankruptcy recovery plan put forth by Brookfield Asset Management rather than a competing offer from Simon Property Group.

Volume was decent, with 1.18 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 18 to 5.

Tuesday morning's notable earnings reports include Merck, Pfizer, CVS and MasterCard.

This Week:

TUESDAY: Pending-home sales; factory orders; earnings from Merck, Pfizer, CVS and MasterCard
WEDNESDAY: BOE monetary-policy meeting; weekly mortgage apps; ADP, Challenger job reports; Fed's Rosengren speaks; ISM services index; weekly crude inventories; earnings from Anheuser-Busch, Qwest, Time Warner, Garmin, CBS and Symantec
THURSDAY: Chain-store sales; ECB announcement; weekly jobless claims; productivity; Bernanke speaks; earnings from Activision, Kraft
FRIDAY: Goldman Sachs shareholders meeting; April jobs report; Fed's Plosser speaks; consumer credit; earnings from Liberty Media

More From