U.S. stocks jumped on Monday, driving the S&P 500 to an eight-month closing high, after CIT Group Inc was thrown a lifeline to avoid bankruptcy, and investors bet corporate America would log another strong set of earnings this week.
Broker upgrades of technology bellwethers, including Cisco Systems
Investors were encouraged by signs that the CIT rescue was a private-sector measure instead of a government bailout.
The private money is really the smarter money. They are not going to go in there unless they think it's going to work, said Tom Alexander, head of Alexander Trading, in Savannah, Georgia. I think that's a healthy sign for the market and a sign of liquidity and a willingness of private participants to step up to the plate.
The Dow Jones industrial average <.DJI> shot up 104.21 points, or 1.19 percent, to 8,848.15. The Standard & Poor's 500 Index <.SPX> gained 10.75 points, or 1.14 percent, to 951.13. The Nasdaq Composite Index <.IXIC> rose 22.68 points, or 1.20 percent, to 1,909.29.
Monday's rally extended the market's recovery since the 12-year lows in early March. The Nasdaq hit its highest close since October 2008, while the Dow registered its highest close since January 2009.
Analysts who focus on technicals expect more upward momentum after the S&P 500 punched through near-term resistance at the 950 level.
The earnings season picks up steam this week after a strong start from companies such as Goldman Sachs Group Inc
Coming into this week, 71 percent of 55 S&P 500 companies that have reported so far beat expectations, according to data compiled by Thomson Reuters. Several analysts upgraded bellwether stocks, including three Dow components.
Bank of America-Merrill Lynch raised Caterpillar Inc
Caterpillar advanced 7.8 percent to $36.65 and gave the top boost to the Dow, followed by United Technologies Corp
Elsewhere, Credit Suisse upgraded Cisco Systems Inc
Cisco's stock gained 3.1 percent to $21.15.
Morgan Stanley lifted Walt Disney Co
Chipmaker Texas Instruments Inc
Driven higher by corporate earnings, the broad S&P 500 finished up 7 percent last week, its best week since mid-March. At Monday's close, the S&P 500 was up 40.6 percent from the 12-year closing low of March 9.
On the economic data front, an index gauging U.S. economic prospects increased for a third straight month in June, suggesting the recession was drawing to a close, the Conference Board said.
(Reporting by Ellis Mnyandu; editing by Jan Paschal)