Stocks close up 100 on CIT rescue news

NEW YORK -- Signs of strength in several corners of the economy are helping extend the stock market's rally.

Stocks jumped again Monday following news that CIT had struck a financing deal that will keep the troubled commercial lender out of bankruptcy. More upbeat earnings reports and a better-than-expected read on future economic activity also drove shares higher.

A 100-point gain pushed the Dow Jones industrials back into the black for the year, while the Standard & Poor's 500 climbed to its highest finish since November.

CIT Group Inc.'s deal with its bondholders stoked the market's growing sense of optimism, which got a big boost last week from a string of good earnings news. The Dow and the S&P 500 are coming off their best weekly performance since a spring rally began in March.

CIT's future was cast in doubt after negotiations with federal regulators for bailout funds fell through. Its failure would have been a blow to investor confidence and would have hurt industries like retailing, which has suppliers who rely on CIT for financing.

A surprisingly large rise in a predictor of future economic activity also supported stocks. The Conference Board's index of leading economic indicators rose 0.7 percent in June, more than the 0.4 percent forecast. It was the third straight month of increases.

Market indicators jumped about 7 percent last week following a monthlong slide driven by discouraging reports on the economy. Solid earnings and outlooks from leading companies including Goldman Sachs Group Inc., Intel Corp. and International Business Machines Corp. gave investors hope that the worst of the recession could be past.

George F. Shipp, chief investment officer at Scott & Stringfellow in Virginia Beach, Va., said word that CIT might be able to sidestep bankruptcy gave investors another sign that the economy and the markets are healing because the government wasn't forced to intervene.

"The private sector is stepping in where the taxpayer didn't have to this particular time. That's the way it's supposed to work," he said.

According to preliminary calculations, the Dow rose 104.21, or 1.2 percent, to 8,848.15, its highest level since Jan. 6.

The S&P 500 index rose 10.75, or 1.1 percent, to 951.13, its best finish since Nov. 5.

The Nasdaq composite index rose 22.68, or 1.2 percent, to 1,909.29, its ninth straight advance. The index is at its highest mark since Oct. 3.