By Kristina Peterson
NEW YORK (MarketWatch) -- U.S. stocks closed at their highest
level in more than four months on Monday, one day ahead of a
Federal Reserve meeting as encouraging financial and home builder
earnings boosted confidence in the economic recovery.
Bulls' bid to extend a three-week winning streak was also helped
after the group in charge of dating the starts and ends of economic
downturns declared that the U.S. recession ended last summer.
"It doesn't mean growth is robust, but it is growth," Paul
Nolte, managing director at Dearborn Partners, said of Monday's
declaration by the National Bureau of Economic Research that the
longest U.S. recession since World War II ended in June 2009.
The Dow Jones Industrial Average (DJI) gained 145.77 points, or
1.4%, to end at 10,753.62, its highest close since May 13.
All but one of the Dow's 30 components rose, including
International Business Machines Corp. (IBM), which was up 1.2%
after the company said it would buy business-software firm Netezza
Corp. (NZ) for $1.7 billion.
"Companies are flush with cash, and valuations are pretty cheap,
so I would think M&A is only going to accelerate for the next
six months," said Maris Ogg, president at Tower Bridge
Advisors.
The S&P 500 (SPX) rose 17.12 points, or 1.5%, to 1,142.71,
led by a 2% jump in financials.
The Nasdaq Composite Index (RIXF) advanced 40.22 points, or
1.7%, to 2,355.83.
Nearly five stocks advanced for every one on the decline on the
New York Stock Exchange, where 955 million shares traded.
The NBER report propelled the S&P 500 past levels not
breached since May, with investor sentiment already having been
bolstered when home builder Lennar Corp. (LEN) topped forecasts,
reporting a better-than-expected quarterly profit and a drop in
orders that proved less dreary than those experienced by others in
its industry.
"Buyers were able to take the S&P above 1,131 resistance. If
the S&P closes above 1,131, rally hats will be on," Elliot
Spar, market strategist at Stifel, Nicolaus & Co., wrote in a
note.
The National Association of Home Builders reported that its
monthly index of builder sentiment remained unchanged in September
at an 18-month low. Read more about home builders' sentiment.
In its report, the NBER cautioned that its finding did not
represent a forecast about the future, saying that if another
downturn occurs it would represent a separate recession -- a
scenario viewed as unlikely by most economists -- rather than the
much-discussed "double dip."
Investor sentiment has turned "more positive because the
economic news has been better than feared, so it's more a sigh of
relief," Ogg said of Wall Street's recent climb.
Gold futures settled at their third consecutive record high on
speculation about further stimulative U.S. government action ahead
of Tuesday's meeting of the Federal Reserve's rate-setting
committee. Worries over the possibility for more economic stimulus
weighed on the dollar, sending it lower against both the euro and
the yen.
Demand for Treasurys was mixed, with the two-year note (UST2YR)
flat, but the 10-year note (UST10Y) up, pushing its yield down to
2.70%. Crude-oil prices rose above $76 a barrel.