Stocks hit 10-week highs on Monday, sending the S&P 500 above key technical levels as a weak U.S. dollar helped boost energy and raw materials sectors.
Strong results in Europe from banks BNP Paribas SA
The falling greenback triggered a spike in crude prices, which, coupled with BP's
Macondo-linked companies Transocean Ltd
Energy stocks suffered the double whammy of a sharp correction in the stock market and one of the biggest environmental disasters of a generation, said Richard Ross, global technical strategist at Auerbach Grayson in New York.
That situation is largely remedied, the cleanup has ways to go, but they're capping the PR disaster and now things are improving.
Crude futures rose above $81 per barrel for the first time since early May. The S&P energy sector <.GSPE> jumped 3.2 percent.
The Dow Jones industrial average <.DJI> rose 186.34 points, or 1.78 percent, to 10,652.28. The Standard & Poor's 500 <.SPX> gained 21.55 points, or 1.96 percent, to 1,123.15. The Nasdaq Composite <.IXIC> added 39.01 points, or 1.73 percent, to 2,293.71.
The S&P 500 was trading above its 200-day moving average and faces strong resistance around the 1,121 level, the midpoint of the slide from its historic high reached in October 2007 and the 12-year low hit in March 2009.
The benchmark has not been able to close above this 50 percent retracement since mid-May.
The more times a level is tested, it heightens the significance of the move when you finally do break through, said Ross from Auerbach Grayson.
He said if the benchmark closes beyond the 1,120 level there's very little overhead resistance right now. The next stop is 1,150 and all of a sudden 1,230 (the 61.8 percent retracement of the 2007-2009 slide) is back on the table.
U.S. results also helped as Humana Inc
Further boosting stocks, the Institute for Supply Management said the U.S. manufacturing sector grew at a faster rate than expected in July. However, economists noted new orders fell, a negative sign for growth. The government reported construction spending unexpectedly rose in June.
(Reporting by Rodrigo Campos; Editing by Kenneth Barry)