The FINANCIAL — NEW YORK -(Dow Jones)- U.S. stocks advanced Monday, mirroring the turnaround in overseas markets, as investors weighed signs of further efforts to bolster European markets and to contain the continent's sovereign-debt crisis.
The Dow Jones Industrial Average climbed 89 points, or 0.8%, to 10860. The action follows the Dow's biggest weekly point drop since October 2008, as investor worries of a Greek-debt default and further turmoil in global markets spurred a broad selloff in stocks and commodities, and also drove Treasury yields to historic lows.
The Standard & Poor's 500-stock index rose 9 points, or 0.8%, to 1146 and the Nasdaq Composite advanced 11 points, or 0.4%, to 2494.
Financial stocks led the way higher, with J.P. Morgan Chase adding 2.5% and Bank of America gaining 2.4% to lead blue-chip stocks. Financials were followed by industrial shares among S&P 500 leaders.
Investors appeared to shrug off another sign of the weakening U.S. economy Monday after the Federal Reserve Bank of Chicago said its National Activity Index turned sharply negative in August.
European markets were broadly higher, with the Stoxx Europe 600 erasing earlier losses of as much as 1.2% to trade up 2% recently, on hopes for coordinated action to resolve the euro-zone debt crisis, including the increase of a bailout fund and a possible interest rate cut by the European Central Bank.
ECB executive board member Lorenzo Bini Smaghi on Sunday became the first ECB official to publicly throw his weight behind a euro-zone bailout fund patterned after U.S. efforts to stem the 2008 financial crisis. It would be a more aggressive approach to the sovereign-debt crisis than what European leaders have pursued thus far.
European traders also attributed the turnaround in stock prices there to comments from ECB Governing Council member Ewald Nowotny that the central bank can't rule out a reduction in interest rates. "The ECB never pre-commits, and rate cuts cannot be excluded. It all depends on the developments ahead," Mr. Nowotny said in an interview with Market News International.
Asian bourses fell, however, with China's Shanghai Composite shedding 1.6% and Japan's Nikkei 225 falling 2.2%.
Gold futures fell to an eight-week low and traded below $1,627 an ounce recently, after a week's rout that resulted in the biggest weekly percentage decline since 1983. Crude-oil futures slipped to below $80 a barrel. The U.S. dollar fell slightly against the yen but gained slightly versus the euro.
On the economic calendar, data on new home sales in August is scheduled for release at 10 a.m., EDT, and a reading on manufacturing activity in the Dallas area is due out at 10:30 a.m., EDT.
In corporate news, shares of Boeing rose 2.2% after the blue chip aerospace and defense company delivered its first 787 Dreamliner to Japan's All Nippon Airways on Sunday.
Clorox lost 6.2% after billionaire investor Carl Icahn withdrew his 11 nominees to replace the household-product company's board after determining his plan to sell the company would be opposed by shareholders at this time.
Eastman Kodak dropped 22% after the film company said late-Friday that it borrowed $160 million against its credit line, which raised fears of a cash shortage.
Mela Sciences gained 85% after the company received an approvable letter from U.S. Food and Drug Administration for its MelaFind device used to diagnose melanoma.
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