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Stocks Finish on High Note

NEW YORK ( TheStreet) -- Stocks gained momentum in the final hour of trading on Monday, pushing close to session-highs on their way to a fourth straight positive finish.

More heartening economic data, another spate of deal-making and greater clarity for the financial sector following the announcement of new tighter global capital standards for the banks saw bulls returning to the market with new vigor.

The Dow Jones Industrial Average was up 81 points, or 0.8%, to 10,544. The S&P 500 was higher by 12 points, or 1.1%, to 1,122. The Nasdaqoutperformed the other bluechip indices, rising 43 points, or 2%, to end at 2,285.

Technology stocks helped drive the Nasdaq higher. Shares of Apple (AAPL), Microsoft (MSFT) and Intel (INTC) led the group in terms of high-volume trading.

Volumes improved on Monday's trading as traders and investors returned back to the markets following the holiday. Breadth was extremely bullish with advancers outnumbering decliners by a 4-to-1 ratio.

Financial stocks were the leaders of the pack on Monday after the Basel Committee on Bank Supervision announced Sunday the adoption of higher capital standards . The new rules boost the minimum common equity capital standard to 4.5%, from 2%, along with a capital conservation buffer of 2.5% to withstand future periods of stress. The new looser-than-expected standards will be phased in over a long timeline beginning in 2015, giving banks more time than previously thought to adjust to the new rules.

Bank of America (BAC - Get Report) shares rose 2.9% to $13.95. Large money-center banks JPMorgan Chase (JPM) and Wells Fargo (WFC - Get Report) gained 3.4% and 2.8%, respectively. The KBW Bank Index, comprising 24 large-cap banks, added 3.1% while the Financial Select Sector SPDR (XLF), an exchange-traded fund that tracks the financial sector, pushed up 1.9%.

"With the new Basel capital standards, you can check off another item of uncertainty off the list," said Jay Suskind, senior vice president at Duncan Williams, noting that the banks have eight years to comply with the standards. "The market is looking at the glass half-full rather than half-empty now and they liked what they saw," he added.

Stocks in the materials and capital goods sectors also helped drive the day's rally on the latest Chinese economic data. China's industrial production grew 13.9% in August, while retail sales in the country rose 18.4%.

The data helped to ease concerns about an abrupt slowdown in China's economy since it pointed to a more moderately paced slowdown. Economists view economic growth in China as helping to offset sluggish demand elsewhere in the world and a good sign for global economic strength.

That helped spark a global rally. Japan's Nikkei ended 0.9% higher, while Hong Kong's Hang Seng Index jumped 1.9%. The FTSE in U.K. closed the day higher by 1.1% and Germany's DAX finished 0.7% higher.

In U.S. economic news, the Treasury Department said the government's budget deficit was smaller in August year-over-year, thanks to rising tax receipts. The deficit totaled $90.5 billion last month, smaller than the $104 billion economists expected, according to Briefing.com, and down 12.6% from a deficit of $103.6 billion in August of 2009. The Congressional Budget Office forecast the deficit this fiscal year will reach $1.34 trillion, the second-largest on record, despite higher tax revenues being generated by the economic recovery.

"We're seeing the revenue coming back," Scott Brown, chief economist at Raymond James, told Bloomberg. "The cumulative deficit for the fiscal year is a bit smaller, but still fairly wide. It doesn't signal a lot of improvement."

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