Stocks surge; Dow up triple digits

U.S. stocks rebounded on Monday, encouraged by talks of stimulus in Asia, as investors eyed the week’s economic data.

“In terms of technicals this is just noise,” said Peter Boockvar, chief market analyst at The Lindsey Group. “This is just trading within a range (of 2,040 and 2,110 in the S&P 500). … We need to see earnings season before we know which way to go.”

The Dow Jones industrial average traded about 250 points higher after leaping 275 points in morning trade.

“Eased tensions in the Middle East and benign economic data gave bargain hunters some motivation to step in,” James Meyer, chief investment officer at Tower Bridge Advisors, said in a note. “This morning there are a slew of merger deals. Merger activity is often a catalyst for a stronger stock market, as it paints a picture that suggests corporations see bargains out there in the market.”

Oil prices fell as discussions over Iran’s nuclear program indicated a possible end to sanctions and an increase in Iranian oil exports. Fighting continued in Yemen.

Several pharmaceutical firms announced deals before the open.

UnitedHealth is buying pharmacy benefits manager Catamaran for $12.8 billion or $61.50 per share and combining it with its OptumRx unit.

The California-based biopharmaceutical company, Hyperion Therapeutics, is being bought by Ireland’s Horizon Pharma for $1.1 billion in cash or $46 per share.

Auspex Pharmaceuticals is being bought by Teva for $101 per share, or $3.2 billion in cash. Auspex, which went public last year, specializes in treatments for patients with movement disorders and other rare diseases.

Today we’re going to have “more of what we saw last week, even though we’re starting on the sunny side of the street,” said Peter Cardillo, chief market economist at Rockwell Global Capital. “Volatility could enter later in the session. This could be part of window dressing.”

Tuesday marks the end of the first quarter, and few earnings are expected in the abbreviated trading week. The primary data point for the week will be the key March employment report, which comes out on Friday when markets are closed for Good Friday.

“Sounds like what sparked some of the rally was easing and things in China,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab. “This looks like it could be a fairly quiet week. (Whenever) you get a 3-day weekend the market gets a little quiet.”

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European stocks climbed amid encouraging euro zone economic reports. China’s benchmark Shanghai Composite index hit a fresh seven-year high as markets interpreted weekend comments from Zhou Xiaochuan, governor of the People Bank’s of China, as indication of further stimulus. Zhou warned on Sunday that the world’s second-largest economy needs to be vigilant for signs of deflation.

U.S. stocks traded lower for most of last week, only turning higher late on Friday with Federal Reserve Chair Janet Yellen reiterating that a rate hike would come gradually.

“Stanley Fischer and Janet Yellen have made it pretty clear we won’t be at odds with other central banks,” said Art Hogan, chief market strategist at Wunderlich Securities.

The U.S. dollar gained about half a percent on Monday, with the euro near $1.08. Oil prices fell with crude just above $48 a barrel and brent near $56 a barrel. The continuing trends in commodity prices are expected to weigh negatively on earnings reports in April.

“Once we get through the first quarter here we’re hoping the worse of the revisions are over,” said Nick Raich, CEO of The Earnings Scout, noting that most stocks have tended to rise despite recent earnings reports that have followed a pattern of beating (lowered) estimates and further revising forecasts down.

For these four days, it’s “less of an earnings week and more of an economic data week,” Raich said.

Personal income in February was mostly in-line with consensus, posting a gain of 0.4 percent, above expectations of 0.3 percent. Consumer spending rose 0.1 percent.

Pending homes sales were up 3.1 percent in February, with gains driven primarily by sales in the West and Midwest.

The Dow Jones Industrial Average traded up 226 points, or 1.30 percent, at 17,942, with UnitedHealth leading gains and Intel the only blue chip lagging.

The S&P 500 traded up 19 points, or 0.94 percent, at 2,080, as energy led gains across all sectors.

The Nasdaq traded up 44 points, or 0.90 percent, at 4,935.

The U.S. 10-year Treasury yield traded near 1.94 percent.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 14.

Four shares advanced for every decliner on the New York Stock Exchange, with an exchange volume of 54 million and a composite volume of 138 million in the minutes following the open.

Crude oil futures fell 45 cents to $48.42 a barrel on the New York Mercantile Exchange. Gold futures fell $17.30 to $1,182.10 an ounce in the open.

The iShares Nasdaq Biotechnology ETF (IBB) held about half a percent higher.

Symbol
Name
Price
Change
%Change
DJIA Dow Jones Industrial Average 17960.23
247.57 1.40%
S&P 500 S&P 500 Index 2079.39
18.37 0.89%
NASDAQ Nasdaq Composite Index 4921.42
30.20 0.62%

Madison Square Garden—MSG plans to split into two companies, one to own its sports teams, entertainment productions, and the MSG arena, while the other would distribute the company’s sports and entertainment content. MSG had revealed that it was exploring such a move back in October.

Yahoo, Microsoft—The two will extend talks aimed at renegotiating their 10-year search partnership by 30 days. The two had originally struck the partnership in 2010 in hopes of better competing with Google.

Best Buy—Best Buy will consolidate and close stores in Canada, in a move that the electronics retailer said will cost it up to $280 million in restructuring charges this year.

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DreamWorks Animation—The studio’s movie “Home” topped the weekend box office with better-than-expected North American ticket sales of $54 million. “Home” will be the only release by DreamWorks in 2015.

CNBC’s Peter Schacknow contributed to this report

On tap this week:

Tuesday

End of quarter

Earnings: Movado, Synnex

8:00 am: Richmond Fed President Jeffrey Lacker on economy

9:00 am: S&P/Case-Shiller home prices

9:45 am: Chicago purchasing managers

10:00 am: Consumer confidence

3:00 pm: Kansas City Fed President Esther George on economy

Wednesday

Vehicle sales

Earnings: Monsanto, Acuity Brands

8:15 am: ADP employment

9:45 am: Manufacturing PMI

10:00 am: ISM manufacturing

10:00 am: Construction spending

Thursday

Earnings: CarMax, Micron

8:30 am: Initial claims

8:30 am: International trade

10:00 am: Factory orders

Friday

Good Friday holiday

Stock and bond markets closed

Futures markets open holiday schedule

8:30 am: Employment

8:30 am: Minneapolis Fed President Narayana welcoming remarks, community development conference

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