Wall Street rose strongly and settled at multi-month highs Monday, as upbeat data from both overseas and the U.S. boosted sentiment that the worst of the global recession was past.
The U.S. Commerce Department posted that consumers cut spending 0.1 per cent in April. Economists were expecting a 0.2 per cent reduction. But income has jumped 0.5 per cent, which surprised economists who had forecast a 0.2 per cent decline and alleviated concerns on declining consumer spending.
Another report from the Commerce Department showed construction spending in the United States rose 0.8 percent in April. The unexpected gains marked the second straight month of increase in spending on construction projects.
Meanwhile, the Institute of Supply Management on U.S. manufacturing showed the contract of the sector slowed in May with the index climbing up to 42.8, beating expectations.
Moreover, Manufacturing in China expanding for a third month in May also added to the recovery hopes. Oil climbed to seven-month high and other commodities also posted gain. Therefore, shares of energy companies and basic material stocks substantially increased.
Discretionary stocks and commodity stocks pushed Wall Street sharply higher despite General Motors Corp.'s filing for bankruptcy protection.
Dow Jones announced Monday networking company Cisco Systems and insurance giant Travelers Companies will replace General Motors and Citigroup in the Dow Jones industrials index, effective on June 8. Cisco and Travelers advanced on the news.
The Dow Jones rose 221.11, or 2.60 percent, to 8,721.44. Broader indexes also moved higher. The Standard & Poor's 500 index rose 23.73, or 2.58 percent, to 942.87 and the Nasdaq rose 54.35, or 3.06 percent, to 1,828.68.