Stocks surged Monday, sending the Dow industrials near the break-even point for the year, as a better-than-expected report on U.S. manufacturing activity raised hopes that a global economic recovery is near. Stocks opened higher and rose sharply in the first hour of trade as investors looked past an official declaration of bankruptcy by General Motors (GM), which had been widely expected. The U.S. manufacturing sector continued to shrink in May, but the pace of contraction was slower than expected, according to a private industry group. Despite the deterioration in the sector, the report suggested that the overall economy is ready to expand. The report was similar to ones on Asian and European manufacturing. U.S. consumer spending fell 0.1 percent in April, but personal income rose 0.5 percent—the biggest increase in 11 months—sending the U.S. savings rate sharply higher, the government reported. A separate report showed that construction spending unexpectedly rose 0.8 percent in April, its largest increase in eight months. Light sweet crude oil for July delivery rose $2.27 to $68.58 a barrel on the New York Mercantile Exchange, a seven-month high. The U.S. dollar fell versus the euro and the British pound, and it rose versus the yen. Two Dow Jones components—GM and Citigroup—will be officially removed from the index on June 8. Travelers Companies will replace Citigroup, and Cisco Systems will replace GM on the world's most closely watched stock index. The Dow Jones industrial average rose 221.11, or 2.6 percent, to 8,721.44, led by industrial and technology stocks. Boeing rose 6.5 percent, and United Technologies gained 5.3 percent. Shares of energy giants Exxon Mobil and Chevron rose along with oil prices. GM filed for bankruptcy protection Monday, hours after a U.S. bankruptcy court in New York approved Chrysler's sale of most of its assets to Italian carmaker Fiat. GM shares rose 8 percent. The broader Standard & Poor's 500 index rose 23.73, or 2.6 percent, to 942.87, its highest point so far this year. The technology-heavy Nasdaq composite index rose 54.35, or 3.1 percent, to 1,828.68. The New York Stock Exchange composite index rose 165.00 to 6,169.07. The American Stock Exchange composite index rose 33.93 to 1,645.21. And the Russell 2000 index rose 19.75 to 521.33.
