Stocks rallied on Monday, building on strong gains in overseas markets and helped by new economic reports providing further evidence that the struggling economy might have hit bottom.
The Dow Jones industrial average rose 221.11 points, or 2.6%, to 8,721.44. The S&P 500 was up 23.73 points, or 2.58%, to 942.87, while the Nasdaq composite index jumped 54.35 points, or 3.06%, to 1,828.68.
The DJIA gain put it within one percentage point of erasing its 2009 decline while the S&P 500 increase moved it back to levels not seen since November and above its technically important 200-day moving average at 926.90.
In other markets, Treasuries and the dollar fell while commodities rallied.
Investors looked past todays widely anticipated bankruptcy court filing by General Motors Corp., once the icon of American manufacturing. In its filing, GM listed assets of about $82 billion and liabilities of nearly $173 billion.
Dow Jones & Co. announced today that it was pulling both GM and Citigroup Inc. from the blue-chip barometer in favor of Cisco Systems Inc. and Travelers Cos. The changes will take effect June 8.
The parlous state of GM has left us with no choice but to remove it from the Dow, said Robert Thomson, editor-in-chief of Dow Jones, in a statement announcing the change. We were reluctant to remove Citigroup at the height of the financial frenzy, but it is clear that the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake.
Earlier, the Commerce Department reported that construction spending rose 0.8% in April, beating economists expectations of a decline. In addition, the Institute for Supply Managements factory index rose to 42.8 in May from 40.1 in April, indicating that manufacturing shrank at a slower pace in May. A reading below 50 indicates contraction.
Mondays action followed solid gains in overseas stock markets. In Hong Kong, the benchmark Hang Seng index climbed 3.95%, and in Japan, the Nikkei 225 rose 1.63%. Londons FTSE 100 added 2%.
The S&P 500 has been a laggard among global stock markets, independent economist Edward Yardeni wrote in a note to clients. The best performing stocks have been in emerging markets so far this year.