Wall Street is starting June with a gain, boosted by reports that paint a more upbeat picture of the global economy.
Investors looked past General Motors Corp.’s bankruptcy filing and instead took cues from overseas markets, which surged on Asian and European surveys showing improvements in manufacturing.
The stock rally gained more momentum Monday from better-than-expected reports on the U.S. economy, including manufacturing, consumer spending and construction spending.
The Dow Jones industrial average rose about 190 points, or 2.3 percent, by midmorning trading. Other major indexes also advanced more than 2 percent.
Because GM’s bankruptcy filing was so well telegraphed in advance, the move did not faze investors.
“It’s remarkable the degree of resilience that the equity markets have shown,” said Jack A. Ablin, chief investment officer at Harris Private Bank, referring to the market’s ability to look past GM and other disruptions. “We’ve had plant closings, we’ve had dealer shutdowns. I think the reverberations have already been felt.”
The government will get a 60 percent stake in GM, and is expected to provide the automaker with an additional $30 billion on top of the $20 billion it has already received to help it restructure. Meanwhile, rival Chrysler LLC, which filed for Chapter 11 protection in April, is expected to emerge from bankruptcy protection this week.
The Dow Jones industrial average announced Monday it is dropping GM as a component after the automaker filed for bankruptcy, as well as Citigroup, in which the government now owns a significant stake. GM and Citi will be replaced with Travelers Cos. and Cisco Systems Inc. next week.
In midmorning trading, the Dow rose 193.95, or 2.3 percent, to 8,694.28. The Standard & Poor’s 500 index rose 22.83, or 2.5 percent, to 941.97. The Nasdaq composite index rose 47.69, or 2.7 percent, to 1,822.02.
Copyright 2009 The Associated Press.
