Stocks surge on recovery hopes

NEW YORK -- Wall Street rose Monday, pushing the major gauges to multi-month highs, as a better-than-expected housing market report intensified hopes that the economy is closer to stabilizing.

The Dow Jones industrial average (INDU) gained 214 points, or 2.6%, ending at the highest point since Jan. 13. The S&P 500 (SPX) index added nearly 30 points or 3.4%, ending above 900 for the first time since Jan. 8 and turning higher for the year.

The Nasdaq composite (COMP) rose 44 points, or 2.6% and ended at the highest point since Nov. 4.

Stocks have been surging -- since bottoming on March 9 -- on bets that the worst for the economy is over. Those bets were furthered Monday by the day's economic news.

The March pending home sales index from the National Association of Realtors jumped 3.2% from February, surprising economists who were looking for the index to hold steady.

"If you subscribe to the theory that the global economic crisis started with the U.S. housing market and will end there, you're going to be encouraged by reports like this that suggest housing is bottoming," said Kevin D. Mahn, managing director at Hennion & Walsh.

Another report, from the government, showed construction spending rose 0.3% versus forecasts for a decline of 1.6%. Spending fell 1% in February.

Mahn said investors were also responding well to weekend comments from Berkshire Hathaway (BRK.A)'s Warren Buffett, who said he sees the recession ending soon and predicts that no big bank will fail. He also talked up Wells Fargo (WFC, Fortune 500), one of Berkshire's largest holdings. Read full articel