Stocks climbed on Monday, lifted on expectations that lender CIT Group Inc
The lender to nearly a million small- and mid-sized U.S. companies reached a deal with bondholders to provide $3 billion in emergency financing to the troubled lender, a source familiar with the situation said. CIT's stock rose nearly 83 percent to $1.28 on the news.
The rescue they've gotten has been a compromise from bondholders rather than the government. The market has looked kindly on that, said Kevin Caron, market strategist at Stifel, Nicolaus & Co in Florham Park, New Jersey, who described CIT as very strategic for the economy because it lends to small and mid-sized businesses.
Market sentiment also improved after a number of analysts issued upgrades on several bellwether stocks, including three Dow components.
Bank of America-Merrill Lynch upped Caterpillar Inc
Shares of Caterpillar advanced 6.2 percent to $36.11. It topped the list for percentage gainers among Dow components, and helped the Dow Jones U.S. Heavy Construction index <.DJUSHV> rise 2.2 percent.
Elsewhere, Credit Suisse upgraded Cisco Systems
Morgan Stanley lifted Walt Disney Co
Cisco shares added 2.8 percent to trade at $21.09, while Disney gained 2.5 percent to $25.12.
Also in company news, Human Genome Sciences Inc
The Dow Jones industrial average <.DJI> gained 50.33 points, or 0.58 percent, to 8,794.27. The Standard & Poor's 500 Index <.SPX> rose 4.85 points, or 0.52 percent, to 945.23. The Nasdaq Composite Index <.IXIC> added 12.21 points, or 0.65 percent, to 1,898.82. Earlier in the session, the tech-heavy Nasdaq hit an intraday high for the year of 1,906.24.
Driven higher by corporate earnings, the broad S&P 500 finished last week with a 7 percent gain for its best week since mid-March. The S&P 500 is up 39.7 percent from a 12-year closing low hit on March 9.
Stifel's Caron said the combination of strong earnings and CIT is the short-term catalyst for Monday's upside move.
Companies scheduled to report quarterly results after the close include Texas Instruments Inc
Despite warning of significant risk of a double-dip recession, Goldman Sachs raised its year-end target for the S&P 500 to 1,060 from 940 -- a boost of 12 percent from current levels.
On Monday, an index gauging the U.S. economy's prospects increased for a third straight month in June, suggesting the recession was drawing to a close, the Conference Board said. The index of leading economic indicators gained 0.7 percent in June, exceeding economists' forecasts, and following May's revised increase of 1.3 percent.
(Editing by Jan Paschal)