NEW YORK — U.S. stock investors Monday kicked off the month with a bang, pouring into stocks, oil and the euro as hopes grew for a robust global economic rebound.
The Dow Jones industrial average closed up 208.44 points, or 1.99 percent, at 10,674.38, with all of its 30 components in the black. The strong start to August comes on top of a July that saw the Dow climb 7.1 percent, its biggest monthly gain since July 2009.
The market burst out of the gate with triple-digit gains following stronger-than-expected quarterly reports from European banks, and hung on to its gains after a better-than-forecast July reading of the Institute for Supply Management's manufacturing index and an unexpected climb in June construction spending. Also helping stocks were encouraging manufacturing numbers from Europe.
"Clearly the positive momentum from July is carrying over into August," said Alan Gayle, senior investment strategist with RidgeWorth Investments. He cautioned, however, that "it's still too early to declare all clear" on the economic front, with manufacturing data still relatively weak despite beating expectations.
"I don't think the economy is on track for a tremendous second half, but to the extent that expectations had been beaten down, it was a good opportunity for economically-sensitive sectors to rebound," he said, describing a "pro-cyclical" market led by energy and materials companies, with traditionally defensive sectors like consumer-staples and health-care stocks lagging slightly.
The Nasdaq composite gained 1.8 percent to 2,295.36. The Standard & Poor's 500 jumped 2.2 percent to 1,125.86. Those gains helped the two indexes climb back into the black for the year. Volumes, however, were relatively light, with New York Stock Exchange composite volume of 4.3 billion shares.
Companies with significant global exposure led the Dow's climb as confidence mounted in the overseas economic recovery. Alcoa shares were the biggest gainers, adding 4.8 percent, while DuPont shares rose 2.3 percent.
"We have markets pricing in the reality that the U.S. recovery is not going to be fantastic, but the global economy continues to do OK, and given that many of the companies in the broad indexes are big multinationals, it's not the end of the world," said Michael Church, president of Addison Capital.
Financials strengthened, boosted by upbeat earnings from HSBC Holdings and BNP Paribas. Bank of America advanced 2.9 percent, and JPMorgan Chase rose 3.4 percent. Investors said strong earnings in Europe were contributing to a rise not just in financials but across the broad market.
"You've got earnings numbers coming out that confirm some of the information coming out of the European bank stress tests," said Brian Singer, chief investment officer at Singer Partners. "It confirms that there is perhaps less of a reason to be concerned about the financial sector."