S&P, Nasdaq Cross Key Milestones

PETER A. MCKAY DONNA KARDOS YESALAVICH

Associated Press

Traders work on the floor of the New York Stock Exchange on Monday.

Strong bank profits and hopes for rising demand in raw materials lifted stocks Monday to their highest levels since November.

The Dow Jones Industrial Average rose 114.95 points, or 1.3%, to 9286.56, closing above the 9200 mark for the first time since November. The Dow has risen three straight days, gaining 2.4% in that span.

The blue-chip gauge was helped by solid gains in commodity-producing stocks. Alcoa leapt 7.2%. Bank of America rose 2.1% after shaking up its management and agreeing to pay $33 million to settle a Securities and Exchange Commission civil suit over bonuses paid to Merrill Lynch employees.

08/03/09: S&P, Nasdaq Bounce to New Highs

2:14

Last week's rally continued as the S&P surged above 1000 and the Nasdaq crossed the 2000-line. Popular interest in "Cash for Clunkers" also pushed auto stocks higher. Simon Constable reports after the bell.

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The S&P 500 jumped 15.15 points, or 1.5%, to 1002.63, crossing 1000 for the first time since November. The Nasdaq Composite Index rose 30.11 points, or 1.5%, to 2008.61. The measure last closed above 2000 on Oct. 1.

Monday's gains were driven by strong earnings results from U.K. banks HSBC Holdings and Barclays and better-than-expected readings on industrial activity in China, Britain and the U.S. Strong economic data and better-than-expected earnings were the foundation of stocks' strong rally in July, when the Dow rose more than 8%.

Bruce Bittles, chief investment strategist at Robert W. Baird, called the rally "one of the most broad-based in history," which he said suggests a healthy bull market. "We think the market's headed higher over the near term," he said.

Major indexes are back at levels not seen since the relatively early stages of the financial debacle that erupted last fall as banks staggered under the weight of soured credit bets. However, stocks are still well off their levels prior to the mid-September collapse of Lehman Brothers that marked the start of the crisis.

The Dow is down 18.7% since Lehman's bankruptcy. The S&P is down 19.9% and the Nasdaq is down 11.2%

John Schlitz, chief technical analyst at Instinet, an online brokerage in New York, said the S&P and the Nasdaq face different prospects for extending their gains.

"You had a pretty good consolidation for the S&P in June, which was an important technical event," because it could have effectively shaken out excesses to leave room for further gains beyond 1000, Mr. Schlitz said. "With the Nasdaq, you didn't have as much consolidation. It's about as overextended as can be at this point."

Among the gainers in the S&P 500's financial sector were KeyCorp, which climbed 11%, and Zions Bancorp, which rose 4.2%.

In the energy sector, Massey Energy, Peabody Energy, Denbury Resources and Nabors Industries all rose at least 5% as oil hit a one-month high. Front month crude-oil futures settled up $2.13, or 3.1%, at $71.58 a barrel in New York. Crude has jumped 13% over the last three trading days and is up 61% on the year.

Ford Motor gained 4.1% after reporting its first increase in light-vehicle sales in 20 months, helped by the cash-for-clunkers program.

Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said his firm has eschewed high-volatility investments in recent months but may begin adding more risk soon.

"It looks like the [stock] market is reaching a point where the rally has a certain foundation to it," he said. "You started out with a positive correction to last year's all-out panic, and now it's morphed into a legitimate rally."

The dollar was mixed, trading higher against the Japanese yen but lower versus the euro. Treasurys prices sank. The 10-year note fell 1-9/32 to yield 3.639%.