NEW YORK – U.S. stocks surged Monday, with the Nasdaq rising more than 1 percent, as oil prices and benchmark interest rates hit multi-month lows, improving the outlook for corporate profits.
The Dow Jones industrial average rose 67.71 points, or 0.59 percent, to end at 11,575.81. The Standard & Poor's 500 Index climbed 11.59 points, or 0.88 percent,to finish at 1,326.37, its highest level in more than five years.
The Nasdaq Composite Index jumped 30.14 points, or 1.36 percent, to close at 2,249.07.
A smaller-than-expected drop in August existing home sales also helped support the market.
Companies that benefit from lower borrowing costs and declining energy prices, such as blue-chips Caterpillar Inc. (CAT) and General Electric Co. (GE), led the advance.
Earlier in the session, the benchmark 10-year U.S. Treasury note's yield touched seven-month lows and crude prices fell to their lowest since March 8, before rebounding at the close.
"Further decline in oil prices has helped out and interest rates have certainly come down — that is very helpful," said Lincoln Anderson, chief investment officer with LPL Financial Services, in Boston.
Caterpillar, the Dow's top gainer, shot up 2.5 percent, or $1.56, to $64.33 on the New York Stock Exchange. General Electric, the No. 1 contributor to the S&P 500's advance, rose 1.4 percent, or 49 cents, to $34.89 on the NYSE.
Apple Computer Inc. (AAPL) was the biggest positive influence on the Nasdaq 100 . Apple's shares rose 3.8 percent, or $2.75, to $75.75 after ThinkEquity Partners LLC said Monday that it raised its price target for the company's stock to $100 from $90 in anticipation of sales improvements.
Broadcom Inc. (BRCM), another top gainer in the Nasdaq 100, jumped 9 percent, or $2.51, to $30.36 after analysts at BMO Capital Markets raised their fourth-quarter earnings estimates on the chip maker.
"Rotation into technology shares and semiconductors is accelerating," said Larry Peruzzi, senior equity trader at The Boston Co. Asset Management.
The president of the Federal Reserve Bank of Dallas, Richard Fisher, captured Wall Street's attention when he said the U.S. economy is doing well, but inflation is still a concern. Those remarks, made at a conference in Monterrey, Mexico, challenged the assumption that the U.S. central bank will cut interest rates early next year.
The pace of existing home sales fell for a fifth straight month in August, according to a report from the National Association of Realtors, but the decline was not as bleak as economists had expected.
The Dow Jones index of home builders' stocks climbed 3.5 percent.
The yield on the 10-year Treasury note, which moves inversely to its price, briefly dropped to 4.53 percent, the lowest level since late February.
Also helping the Dow, shares of computer maker Hewlett-Packard Co. (HPQ) gained 1.7 percent, or 60 cents, to $35.71, on the first trading session after the company's chairman resigned. On Friday, Chairman Patricia Dunn resigned under pressure over the methods that the computer and printer maker used to investigate boardroom leaks to the media.
Shares of Time Warner Inc. (TWX) rose 2.3 percent to $18.13 after several analysts raised their ratings on the company.
Meanwhile, shares of Altria (MO) dropped 6.4 percent to $77.06, while Reynolds American Inc. fell nearly 3 percent to $60.32. A U.S. federal judge gave class-action status on Monday to a lawsuit filed by "light" cigarette smokers who accused tobacco companies of fraud and are seeking damages of as much as $200 billion.
U.S. crude oil for November delivery rose 90 cents to settle on Monday at $61.45 a barrel on the New York Mercantile Exchange. But in overnight electronic trading, it fell to a low of $59.52, the lowest price since March 8.
Volume on the NYSE was heavy, where about 1.75 billion shares changed hands, above last year's daily average of 1.61 billion. On Nasdaq, about 1.89 billion shares traded, above last year's daily average of 1.80 billion.
Gainers outnumbered advancers on the NYSE by a ratio of more than 2 to 1, and on Nasdaq, by about 3 to 2.