LOS ANGELES AND NEW YORK — Hopes for a potential economic recovery trumped General Motors Corp.'s bankruptcy filing Monday as stocks surged around the world on the latest hints of an approaching end to the recession.
The Dow Jones industrial average jumped 221.11 points, or 2.6%, to 8,721.44, almost breaking into positive territory for the year. The Standard & Poor's 500 index reached its highest level in almost seven months.
Before Wall Street had opened, markets in Asia and Europe soared after a report showed that Chinese factories saw their business expand for a third straight month in May.
The U.S. market then was buoyed by the Institute for Supply Management's report on U.S. factory activity in May. Although the group's manufacturing index indicated that business continued to contract last month, the shrinkage was smaller than expected -- and less than April's rate.
The economic data "suggest that the path of least resistance is up" for stocks, even after the heady rally of the last three months, said Bruce Bittles, chief investment strategist at brokerage Robert W. Baird & Co. in Nashville.
The S&P 500 rose 23.73 points, or 2.6%, to 942.87, its highest since Nov. 5. The index has rocketed 39% since it hit a 12-year low March 9.
The technology-heavy Nasdaq composite index gained 54.35 points, or 3.1%, to 1,828.68, extending its rise since March 9 to 44%.
Winners topped losers by more than 4 to 1 on the New York Stock Exchange.
Of the S&P's 10 main industry sectors, industrial stocks led the day's gains, rising 4.7% on average. Deere shot up $3.49, or 8%, to $46.96. Honeywell International jumped $2.19, or 6.6%, to $35.35.
Although many market pros have urged caution in recent weeks, fearful that stocks were getting ahead of themselves, each sell-off has quickly attracted buyers.
Some market bears have pointed to relatively modest trading volume as a sign that the advance was waning. But Richard Sparks, an analyst at Schaeffer's Investment Research in Cincinnati, said the unexciting volume suggests that "many people are still disbelieving" -- which also means there's plenty of money waiting on the sidelines to get in, he said.
In another indication of investors' eagerness to bet on an economic rebound, prices of commodities including copper, wheat, oil and coffee rallied further Monday, padding their gains of the last two months.
Crude oil futures in New York jumped $2.27 to $68.58 a barrel, the highest since Nov. 4.
Gold, however, took a breather, easing 20 cents to $978.60 an ounce.
In foreign trading, the Shanghai market's main index leaped 3.4%, the German market gained 4.1% and Brazilian stocks were up 2.4%.
Once again, Treasury bonds were the day's big losers as some investors bet that a stronger economy would mean higher interest rates and potentially higher inflation. The 10-year T-note yield jumped to 3.71%, up from 3.46% on Friday but below the recent peak of 3.74% reached last Wednesday.
Even as markets seem increasingly confident about an economic turnaround in the second half of the year, analysts note that most of the data on the U.S. and European economies have merely indicated that things have stopped getting worse -- not that they're getting significantly better.
"The challenge is that, going forward, 'less bad' is not good enough," said Alan Gayle, senior investment strategist at RidgeWorth Capital Management in Richmond, Va. "At some point, these companies are going to have to generate stronger earnings growth, and that's where some of the skepticism lies with many investors."