Stocks Call It a Good Day

The Dow Jones index adds 214 points, and the S&P 500 finishes over 900 for the first time since January. Frank Curzio recaps the action in The Real Story (above).
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Updated from 4:25 p.m. EDT

The major stock indices in New York closed solidly higher after spending the entire session in positive territory thanks to a boost from financials and better-than-expected economic data.

The

Dow Jones Industrial Average

rose 214.33 points, or 2.6%, to 8426.74, closing near its highest level of the day. The

S&P 500

gained 29.72 points, or 3.4%, to 907.24, a level not seen since Jan. 9. The

Nasdaq

gained 44.36, or 2.6%, to 1763.56.

American Express

(AXP) - Get Report

and

Bank of America

(BAC) - Get Report

were the Dow leaders, rising 12.3% and 19.3%, respectively.

Citigroup

(C) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

rose 7.7% and 10.2%, and the KBW Bank Index gained 14.7%.

Among other Dow stocks,

Alcoa

(AA) - Get Report

and

DuPont

(DD) - Get Report

tracked up 6.2% and 5.5%, while

Intel

(INTC) - Get Report

climbed 5.4%.

It marks just the

third time this year

that the opening session of the week was positive for the index; Jan. 26 and March 23 were the other two times.

The major indices rose as much as 1.6% last week, resuming gains that were extended for six weeks before a hiccup the prior week. Those gains came despite a

Chrysler

bankruptcy filing and worries about the swine flu.

Part of the reason the rally has extended so far is because so many people missed it and were forced into play from a performance standpoint, says Jeffrey Saut, Raymond James chief investment strategist. "Every new bull market has started as a short-covering bear market rally," he says, but even so, very few rallies have extended much beyond this one.

Economic data were doing nothing to discourage advances, however. The National Association of Realtors said the pending home sales index picked up by 3.2% in March, topping a 2.1% increase in February, and vs. the expectation of no improvement.

Also, the Commerce Department reported that construction spending increased by 0.3% vs. expectations for a 1.6% decline and after an 0.9% drop the prior month.

U.S. Treasury Secretary Tim Geithner, in addition to the Federal Reserve Open Market Committee, has noted recently that the rate of decline in some key economic readings appears to be slowing. Adding some support to the bulls, two readings on consumer sentiment and the Institute for Supply Management's manufacturing index rose more than expected.

Asian markets rose sharply

on Monday, with the Hang Seng in Hong Kong adding 5.5%, after a report on a survey of purchasing managers at Chinese manufacturers.

U.S. stocks paused only briefly as President Barack Obama

proposed measures

to close tax loopholes that have allowed companies to defer tax payments by keeping profits in foreign companies.

Investors will be looking to Washington later this week for more information on the health of the biggest U.S. banks. Regulators are slated to release the results of the so-called stress tests on Thursday, although it's not clear how detailed the information will be.

Regulators delayed the public release of results from Monday to Thursday to give banks more time to debate the findings with the examiners.

Bank of America and Citi were reportedly among banks that were light on capital requirements, according to reports last week. Both banks are working on

plans to raise

more than $10 billion in new capital, according to a report by the

Financial Times

over the weekend.

Reuters

reported on Monday, however, that Bank of America disputed that report.

Wells Fargo

(WFC) - Get Report

and

PNC Financial

(PNC) - Get Report

are also in need of capital per the results of the stress tests, according to the

FT

report. Those stocks tracked up 23.7% and 14.4%, nonetheless.

Rochdale Research analyst Dick Bove is among the critics of the stress tests. "I think that this stress test is perhaps one of the worst ideas that the U.S. Treasury has ever had in the history of the U.S. Treasury going back to Alexander Hamilton," said the analyst on a

Bloomberg TV

interview

.

"I think that you have to be cautious between now and Thursday because you don't know what the government is going to say, they presumably don't know either," said Bove. The situation right now is "fraught with uncertainties," said the analyst. "However, I think that over time bank stocks represent better investments than any other thing I can imagine in the market."

Meanwhile,

AIG

(AIG) - Get Report

is

close to selling

its Japanese headquarters for about $1 billion in an effort to pay down some of its government bailout debt,

The Wall Street Journal

reported. Shares rose 5.8% to $1.46.

News continued to flow out of the auto sector as Italian automaker

Fiat

, which is in the process of acquiring Chrysler, confirmed that it is

in talks

to buy most of

General Motors'

(GM) - Get Report

European operations. GM shares were flat for the day.

In corporate news,

Sprit Nextel

(S) - Get Report

reported a wider loss but beat Wall Street expectations. Sprint is in

final negotiations

to outsource management of its cellular network to

Ericsson

(ERIC) - Get Report

and transfer up to 7,000 U.S. employees to the vendor, the

Journal

reported. Sprint shares were advanced 7.1% to $5, while Ericsson added 4.4% to $8.78.

Stocks overseas were largely higher. In Europe, the FTSE 100 in London was closed for a holiday, but the Dax in Frankfurt rose 2.8%. In Asia, Japan's Nikkei was closed, but Hong Kong's Hang Seng added 5.5%.

The dollar was recently weaker vs. the pound, euro and yen. Longer-dated Treasuries were mixed. The 10-year was flat, to yield 3.15%, while the 30-year was rising 8/32, yielding 4.05%.

Among commodities, crude oil rose $1.17 to settle at $54.47 a barrel, its highest level of the year. Gold rose $14 to $903.80.