Stocks Ignore Citi's Woes

Updated from 4:04 p.m. EDT

Stocks in the U.S. started the fourth quarter with big gains Monday, as traders shook off news from banking giants Citigroup (C Quote) and UBS (UBS Quote) that the late summer credit market meltdown would slice into their results.

The Dow Jones Industrial Average gained 191.92 points, or 1.38%, to 14,087.55, a record close for the blue-chip index. The Dow was last above the 14,000 level on July 19, the only time it had ever finished above that mark.

Among the Dow's 30 components, Verizon (VZ Quote), McDonald's (MCD Quote) and Hewlett-Packard (HPQ Quote) were the best performers, climbing at least 2.4%.

Elsewhere, the S&P 500 was up 20.29 points, or 1.33%, at 1547.04, and the Nasdaq Composite added 39.49 points, or 1.46%, to 2740.99.

Breadth was solidly positive to start the week. On the New York Stock Exchange 3.33 billion shares changed hands, as advancers topped decliners by a 3-to-1 margin. Volume on the Nasdaq reached 1.94 billion shares, with winners outpacing losers nearly 7 to 3.

The news of the day came from Citigroup, who said it was expecting third-quarter earnings to drop 60% from a year ago. The main culprit is a $3.3 billion hit to its securities and banking unit that's tied to the crisis that seized up the mortgage-securities market a few weeks back.

"Our expected third-quarter results are a clear disappointment," said Charles Prince, chairman and CEO of Citigroup. "The decline in income was driven primarily by weak performance in fixed-income credit market activities, write-downs in leveraged loan commitments, and increases in consumer credit costs."