U.S. stocks rose on Monday, sending the S&P 500 to a seven-month high, as reassuring economic data reinforced hopes of economic stabilization, while General Motor's
Data showing that the U.S. manufacturing sector contracted in May at a slower rate than expected fueled hopes the U.S. recession that began in December 2007 is moderating.
Investors were also encouraged by signs of manufacturing stabilization from China, with demand from emerging markets for commodities and other resources seen leading a revival of global growth.
There's a potential for green shoots, said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm, based in Toledo, Ohio, referring to signs of economic stabilization. The best news has been the growth in China. Investors are betting on growth stimulus from the emerging markets.
The Dow Jones industrial average <.DJI> gained 231.38 points, or 2.72 percent, to 8,731.71. The Standard & Poor's 500 Index <.SPX> jumped 24.19 points, or 2.63 percent, to 943.33. The Nasdaq Composite Index <.IXIC> rose 50.97 points, or 2.87 percent, to 1,825.30.
The broad-based advance extended the U.S. stock market's recovery from the 12-year low of March 9, with the benchmark S&P 500 now up about 40 percent since then. The S&P 500's intraday high of 947.77 is its best level since early November 2008.
Standouts included shares of big manufacturers such as Boeing Co
Shares of other natural resources companies also gained, with aluminum producer Alcoa Inc
As expected, General Motors filed for bankruptcy on Monday, marking a historic fall from grace for a storied American corporation. The filing eliminated some market uncertainty about the future of the automaker that has received billions of dollars in government money to stay afloat.
The Chrysler bankruptcy looks like it's finishing up smoothly and investors are hoping that the same thing is in the cards with the GM situation, Lancz said.
Following the bankruptcy filing, Dow Jones Indexes said GM will be removed from the Dow Jones industrial average and will be replaced by Cisco Systems Inc
Cisco provided one of the biggest boosts to the Nasdaq, rising nearly 6 percent to $19.60, while Travelers gained almost 3 percent to $41.82.
GM shares rose 9.3 percent to 82 cents, a day before their suspension by the New York Stock Exchange, while Citigroup fell 1.1 percent to $3.68.
The S&P 500 rose above its 200-day moving average for the first time since May 2008 on an intraday basis, a key milestone that some analysts took as a harbinger of likely gains ahead.
The blue-chip Dow average is at its highest since January 9 and is now up more than 33 percent from a multiyear low in early March.
China's manufacturing sector continued to expand moderately in May as new export orders improved, two surveys showed, adding to tentative signs the world's third-largest economy was stabilizing.
(Reporting by Ellis Mnyandu; Editing by Jan Paschal)