The Nasdaq Composite carried the stock market to a higher close on Monday, building on last week's solid gains as crude oil prices continued their steady descent. 

Today's Market

The Dow Jones Industrial Average rose 48.03 points, or 0.41% to 11782.35, the Standard & Poor’s 500 index gained 9.00 points, or 0.69%, to 1305.32 and the Nasdaq Composite Index picked up 25.85 points, or 1.07%, to 2439.95. The consumer-friendly FOX 50 gained 6.94 points, or 0.75%, to 933.64. 

While the Nasdaq Composite stayed strong for much of the day, the blue chips closed with just slight gains on the day. After starting the morning with modest declines, the Dow surged to more than 120 points in the green before giving back most of that rally. 

As has been the case for so much of the past few weeks, the stock market mirrored the price of crude oil. As oil futures tumbled, stocks moved in the other direction. 

“I think the market is a little over extended here on the upside," said Peter Cardillo, chief market economist at Avalon Partners. “I think we are approaching the levels when we are probably going to decouple ourselves from the price of oil unless we have a dramatic fall." 

General Motors (GM) jumped 7% to lead the Dow higher on Monday. Not far behind were Home Depot (HD), which reached its highest level in nearly two months, and financial giants American Express (AXP) and Bank of America (BAC). On the downside, Boeing (BA) fell 2% as it reportedly may decide not to rebid on an Air Force tanker contract and insurer AIG (AIG) slumped 1.5%. 

The Nasdaq Composite posted much stronger gains than the rest of the market, closing more than 1% higher. Amazon.com (AMZN) and Starbucks (SBUX) were the two best performing stocks on the Nasdaq 100, rising more than 8% a piece. 

The rally follows last week's strong performance, which featured gains of more than 400 points on the Dow -- the best one-week rally since April 18, according to Dow Jones. The bullish week was capped with a 300-point rally on Friday, fueled by the resurgent dollar.

Monday's agenda lacked any major economic or earnings reports so much of the focus remained on the price of crude oil. The commodity fluctuated between modest gains and steep losses, ending the day down 75 cents at $114.45 a barrel. 0Gold futures also struggled, diving $36.40 to $822.80 an ounce to close at the lowest level of 2008, according to MarketWatch. 

The descent in oil prices comes despite some geopolitical concerns, namely the ongoing conflict between Georgia and Russia over the province of South Ossetia. The energy market is closely watching developments as the threat of oil supply disruption may impact prices.

Last week oil suffered a major selloff as the commodity plunged just under $10, or 7.9%, to settle at the lowest level since May 1. In addition to simple supply and demand factors, crude oil has been pushed lower by the strengthening U.S. dollar, which continued to gain ground on rivals. The euro slipped below $1.49 on Monday, falling to a six-month low. The yen slid to the lowest level in seven months while the pound reached a 21-month low

Airline stocks had the most to gain from the lower oil prices, jumping as much as 10% as a group before closing up with more modest gains. United Airlines (UAUA) and American Airlines (AMR) posted some of the sector's biggest gains. 

The market didn't react well to the latest reminder from the Federal Reserve that lenders are continuing to tighten their lending standards for businesses and consumers. The new Fed survey showed 75% of banks had tightened standards for prime mortgages, compared to 60% that said the same during the last survey. 

Corporate Movers

Boeing (BA) may not bid on Air Force's huge refueling tanker contract after all. According to a report in Aviation Week, the defense giant is strongly considering not submitting a proposal to replace the KC-135 tanker. Boeing told FOX Business it is not talking about any of its "internal deliberations." The news comes after Boeing won an appeal earlier this summer with the Government Accountability Office, which found errors in the initial bidding process that awarded the huge contract to Boeing rival Northrop Grumman (NOC).

JPMorgan Chase (JPM), Morgan Stanley (MS) and Wachovia (WB) were all sent letters from New York Attorney General Andrew Cuomo, who is trying to start talks with the banks over their handling of auction-rate securities. Cuomo has already reached settlements with Citigroup (C) and UBS (UBS) in recent days. Those banks agreed to buy back the hard-to-value securities and pay fines to the state and regulators. 

Waste Management (WMI), the No. 1 garbage disposal player in the U.S., upped its offer to acquire Republic Services (RSG) by 9% to $6.7 billion. Republic, the No. 3 industry player, offered to acquire Allied Waste Industries (AW) for $6.32 billion in June but that deal may be thwarted by Waste's takeover attempt. The latest offer from Waste Management includes a $250 million break-up fee if the deal is blocked, including interest that will be added on if the deal doesn't close before the deadline.  

Fannie Mae (FNM) slid 7% after the mortgage giant's shares were downgraded to "market perform" from "outperform" by an analyst at Keefe, Bruyette & Woods. The analyst, Frederick Cannon, also slashed his price target on Fannie to $10 from $48 citing limited upside and a potential common stock offering. Cannon lowered his expectations for Fannie's earnings per share in 2008 and 2009. 

National City (NCC) acknowledged late last week it is the subject of an SEC probe. The regional bank said it was notified of the investigation on June 30 and plans to cooperate with regulators’ requests for documents related to underwriting, dividends and its sale of First Franklin Financial in 2006. Shares of National City have already plunged 68% year-to-date.

Amazon.com (AMZN) jumped 9% to a seven-month high after Citigroup forecasted better-than-expected sales of its Kindle electronic reader. Saying the device could be one of the top holiday shopping season gifts, Citi sees up to 380,000 Kindles sold in 2008. Previously, Citi forecasted sales of 190,000. The bank also upgraded its Kindle-related sales forecast to $1 billion by 2010, up from $400 million to $750 million. 

Berkshire Hathaway (BRK) posted an 8% decline in second-quarter earnings last Friday but topped analyst expectations. Warren Buffett’s conglomerate earned $2.9 billion, or $1,859 per share, compared to mean estimates for $1,370 per share. The company’s revenue increased to $30.1 billion from $27.3 billion a year ago.

Verizon Communications (VZ) avoided a labor strike by agreeing to a new contract on Sunday with a pair of unions that represent about 65,000 employees. The tentative agreement will likely prevent a potentially costly delay in its roll-out of FiOs Internet and video.

Diebold (DBD), a maker of ATMs, posted better-than-expected preliminary quarterly earnings and announced plans to close its Newark, Ohio manufacturing facility, impacting 100 jobs. The company's preliminary adjusted-earnings for the second quarter were 64 cents per share, topping estimates for 41 cents. Diebold's revenue rose 11% to $771 million, below analyst expectations for $776 million. 

Sysco's (SYY) fiscal fourth-quarter profit of 55 cents per share topped analyst estimates for 52 cents, sending its shares higher. The food distributor's revenue increased by 5.4% to $9.7 billion, falling short of consensus estimates for $9.9 billion.

World Markets

The Dow Jones Euro Stoxx 50 Index, a gauge of the 50 biggest companies in Europe, rose 37.18 points, or 1.09%, to 3445.66. The FTSE 100, London's benchmark index, gained 52.60 points, or 0.96%, to 5541.80.

On the continent, Paris' CAC 40 picked up 46.64 points, or 1.04%, to 4538.49, while Germany's DAX added 47.98 points, or 0.73%, to 66009.63.

In Asia, Hong Kong's Hang Seng fell 25.87 points, or 0.12%, to 21859.34 while Japan's Nikkei 225 rose 262.50 points, or 1.99%, to 13430.91.