Late Surge Pushes Stocks to New Heights

Updated from 4:05 p.m. EST

Stocks soared Monday as a late surge pushed the major indices to their highest closing levels in 2 1/2 years, following another round of strong earnings releases.

The Dow rose 134.22 points, or 1.3%, to 10,702.51, its highest close since June 2001; the S&P 500 added 13.82 points, or 1.2%, to 1155.37, its biggest gain in two months and a new 22-month high; and the Nasdaq climbed 29.96 points, or 1.4%, to 2153.83, passing its recent 30-month high.

Volume on the New York Stock Exchange was 1.45 billion shares, while 1.94 billion shares changed hands on the Nasdaq. Advancers beat decliners by about 5 to 4 on the NYSE, and by about 2 to 1 on the Nasdaq.

Traders were at a loss to identify a specific catalyst for the rally, but several said money continues to pour into the market and also noted that the move was unusual with the Fed set to begin a two-day meeting tomorrow. In addition, Michael O'Hare, head of block trading at Lehman Brothers, said light volume was increasing volatility.

The blue-chip average was boosted by healthy gains in Merck (MRK), Hewlett-Packard (HPQ) and AT&T(T), all of which rose 2% or more.

Existing-home sales surged by 6.9% in December, easily topping the consensus forecast, to an annualized rate of 6.47 million units. Sales in 2003 hit a new record. The housing sector continues to be a key driver of growth, buoyed by persistently low mortgage rates.

Other Markets

Markets overseas finished down, with London's FTSE 100 lower by 0.3% to 4446 and Germany's Xetra DAX off 0.6% at 4129. In Asia, Hong Kong's Hang Seng lost 0.2% at 13,727.3 and Japan's Nikkei fell 0.9% at 10,927.6.

The 10-year Treasury note fell 14/32, yielding 4.13%, while the dollar was stronger vs. the European single currency, but weaker against the Japanese yen. One euro was worth about $1.2474 while the dollar was fetching 106.34 yen.