New York - Unfazed by GM's Bankruptcy, The Dow Rallies
New York - Stocks rallied Monday, sending the Dow near the break even point for the year, as better-than-expected readings on manufacturing activity raised hopes that a global economic recovery is brewing.
The Dow Jones industrial average surged 221 points, or 2.6%, to close At 8,721, the bluechip average is within 40 points of breaking even for the year.
nvestors largely looked past the bankruptcy of General Motors, which comes after a months-long restructuring effort fell short.
“Today’s data were better than expected, both here and abroad,” said Phil Orlando, chief equity market strategist at Federated Investors. The recession has “reached its nadir” and the improved economic outlook has helped “draw some cash off the sidelines,” he said.
Meanwhile, two Dow components, General Motors and Citigroup, will be officially removed from the average on June 8, Dow Jones announced Monday. Travelers Companies will take the place of Citi; Cisco Systems will fill GM’s slot.
“I think getting some of the dogs out of the Dow is helping [to] feed the psychology,” said Nick Kalivas, vice president of financial research at MF Global. But Monday’s manufacturing reports were the main driver of the rally, he added.
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