NEW YORK – Stocks rallied Monday, lifting the Dow and S&P 500 to their biggest one-day point gains in six months, after White House economic adviser Ben Bernanke's (search) nomination to succeed Federal Reserve ChairmanAlan Greenspan (search) put to rest some market uncertainty.
Earnings reports also buoyed investor sentiment.
The Dow Jones industrial average (search) rose 169.78 points, or 1.66 percent, to end at 10,385.00. The Standard & Poor's 500 Index (search) gained 19.79 points, or 1.68 percent, to finish at 1,199.38. The technology-laced Nasdaq Composite Index (search) advanced 33.62 points, or 1.61 percent, to 2,115.83.
Shares of American Express Co. (AXP) climbed 5.1 percent to $49.54 on the New York Stock Exchange and gave the biggest boost to the blue-chip Dow average after the financial services provider reported better-than-expected earnings. The financial services sector was the Dow's top performer.
President Bush announced the nomination of Bernanke, a Fed governor who became a top White House adviser last June, around 1 p.m. EDT. But the president's choice for Fed chairman was widely reported ahead of the announcement and the market shot up on the news.
"Any time you remove uncertainty, it's good news for the market," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co.
Bernanke, 51, said following the nomination that, if confirmed, his "first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years." Greenspan, 79, is set to step down on Jan. 31 after more than 18 years at the Fed's helm.
Bernanke served on the Fed's Board of Governors for nearly three years before he was sworn in as chairman of the president's Council of Economic Advisers in June. His move to the White House was watched with interest by financial markets, with many thinking it might be an audition for the top spot at the Fed.
The Philadelphia KBW Bank Index , which includes the stocks of some of the largest U.S. banks, was up 1.5 percent. Some of the buying interest was tied to speculation over possible takeovers in the sector, said John O'Brien, head of sales trading at KeyBanc Capital.
U.S. crude futures for December delivery slipped 31 cents to end at $60.32 a barrel as Hurricane Wilma bypassed the U.S. oil and gas facilities in the Gulf of Mexico, but lashed southern Florida as a Category 3 storm.
"As we see energy prices come down off their extremes, that's going to lend fuel to the fire of the market and also take away the impetus for the Fed to raise rates," said Tom Schrader, managing director of U.S. equity trading at Legg Mason Wood Walker in Baltimore.
The Fed has raised interest rates 11 straight times since June 30, 2004, to curb inflation. Higher interest rates are viewed as negative for stocks because they increase borrowing costs for consumers and companies.
Energy shares like Exxon Mobil Corp. (XOM) rose as the storm bypassed the oil and gas platforms in the Gulf. Exxon Mobil gained 2.7 percent, or $1.48, to $56.85 on the NYSE.
In other earnings news, shares of drugmaker Merck & Co. (MRK) gained 3.1 percent, or 82 cents, to $27 on the NYSE after it posted a 7 percent rise in quarterly earnings.
On the Nasdaq, shares of Taser International Inc. (TASR) surged 19.4 percent, or $1.06, to $6.52 after brokerage Jefferies & Co. raised its investment rating on the stock.
Trading was heavy on the NYSE, with 1.65 billion shares changing hands, well above the 1.46 billion daily average for last year. About 1.58 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year.
The number of advancing stocks outnumbered those declining by a ratio of slightly more than 3 to 1 on the NYSE. On Nasdaq, advancers beat decliners by about 3 to 1.