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NEW YORK - US stocks posted a broad rally Monday after a key analyst upgrade of Goldman Sachs a day ahead of its quarterly earnings report ignited the financial sector.
The Dow Jones Industrial Average, which had closed lower Friday for four weeks running, surged 185.16 points (2.27 percent) to finish at 8,331.68.
The tech-heavy Nasdaq added 37.18 points (2.12 percent) to 1,793.21 and the Standard & Poor's 500 index, a barometer of the broader market, advanced 21.92 points (2.49 percent) to 901.05.
"Thanks to leadership from the financial sector, the broader stock market was able to overcome an early fit of selling pressure and march higher for the remainder of the session," said Briefing.com analysts in a client note.
"Stocks finished at session highs in what was their best single-session percentage advance in six weeks," they added.
The robust rebound on Wall Street was "led by a strong rally in the financial sector that appears to have stemmed mostly from an analyst upgrade of Goldman Sachs," Charles Schwab & Co. analysts said in a client note.
"Four weeks of losses appeared to leave the stock market primed for a rally today. Rising financial stocks pulled Wall Street sharply higher to begin a blockbuster week of earnings reports," said Scott Marcouiller of Wells Fargo Advisors.
Analysts said bank stocks were underpinned after Goldman Sachs received an upgrade from influential Wall Street financial analyst Meridith Whitney.
Whitney "cited the benefit of government-debt issuance for the upgrade just one day before earnings are set to be released," the Schwab analysts said.
Goldman Sachs, which reports second-quarter earnings Tuesday, leapt 5.34 percent to 149.44 dollars.
In its wake, the S&P banking index shot up 7.30 percent.
JPMorgan Chase, due to report financial results Thursday, soared 7.33 percent to 34.71 dollars.
Bank of America surged 9.34 percent to 12.99 dollars and Citigroup climbed 7.34 percent to 2.78 dollars. Both banks publish their earnings Friday.
Elsewhere in the financial sector, ailing CIT Group plummeted 11.76 percent to 1.35 dollars after confirming it was in talks with US authorities to try to avoid bankruptcy.
With no major economic release on the calendar Monday, analysts said investors were bracing for the week's tidal wave of key economic data and earnings reports.
"While investor sentiment has waned in recent weeks, investors could find a renewed interest in equities should earnings results best the modest expectations heading into earnings season," First Trust advisers said in a client note.
Oil majors picked up steam after crude oil prices pared losses t close slightly lower. ExxonMobil rose 0.89 percent to 65.70 dollars and Chevron added 1.69 percent to 62.44 dollars.
In the tech space, Microsoft advanced 3.35 percent to 23.14 dollars after announcing that the 2010 version of its popular Office software will feature online collaboration as the technology giant duels "in the cloud" with Internet giant Google, up 2.39 percent to 424.30 dollars.
Bonds fell back. The yield on the 10-year US Treasury bond rose to 3.346 percent from 3.295 percent Friday and that on the 30-year bond climbed to 4.233 percent from 4.201 percent. Bond yields and prices move in opposite directions.
- AFP /ls
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