Wall Street Rallies, Nasdaq Turns Positive For Year

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The markets rallied on Monday as traders reacted to bullish earnings from heavy-machinery giant Caterpillar, and a flurry of merger activity, pushing the Nasdaq into the green for 2011.

Today's Markets

As of 3:35 p.m. ET, the Dow Jones Industrial Average rose 109 points, or 0.92%, to 11,918, the S&P 500 gained 15.2 points, or 1.2%, to 1,253, and the Nasdaq Composite climbed 60.3 points, or 2.3%, to 2,698.

The blue chips have been moving steadily higher in the past several weeks, climbing more than 9% for the month so far, and into the green for the year. Indeed, if the Dow can hold its gains for another week, this will be the best month for the benchmark index since 2002.

Broader indices have performed well as well; indeed, the Nasdaq climbed into the green for the year Monday, and the S&P 500 sits just points away.

The rally on Monday was broad, with only utilities and consumer staples like Procter & Gamble (NYSE:PG) struggling. Miners and financials performed the best on the day; for example, Freeport-McMoRan Copper & Gold (NYSE:FCX) zoomed close to 10% higher.

More than 90% of the shares listed on the Nasdaq 100 index of non-financial companies were in the green, and a dozen big-name retailers hit all-time highs.  Volatility, as measured by the VIX, dropped 5.6% in a sign of easing concerns on Wall Street.

Caterpillar Earnings Blow Past Expectations

Caterpillar posted third-quarter earnings of $1.71 a share, topping estimates of $1.54.  The world's biggest heavy-machinery manufacturer said its sales were $15.72 billion, also beating expectations of $15.03 billion.

Insurer Cigna (NYSE:CI) unveiled plans to acquire HealthSpring (NYSE:HS) for $3.8 billion -- a 37% premium to the managed care specialists' closing price on Friday. Also on the merger front, Oracle (NASDAQ:ORCL) said it plans on buying cloud-based customer service provider RightNow Technologies (NASDAQ:RNOW) for $1.5 billion, a 20% premium.

Market participants have been paying close attention to euro zone, where leaders met this weekend in Brussels to work out a solution to the 17-member currency bloc's debt crisis. A final decision has been postponed to a second summit on Wednesday, however, reports suggest leaders made some progress.

"Further work is still needed and that is why we will take the decisions in the follow-up euro zone summit," Reuters quoted European Council President Herman Van Rompuy as saying after the summit.

The new package to tackle the crisis will involve recapitalzing the region's struggling banking sector, restructuring Greece's sovereign debt, and a significant increase in the size of the rescue fund, called the European Financial Stability Facility, according to the Wall Street Journal.  However, disagreements reportedly remained on how to leverage the EFSF, and other specifics.

While market participants were generally optimistic a solution will ultimately be crafted, European summits have had mixed results in the past presenting a risk to already volatile markets.

"We recommend staying cautious until more concrete policy announcements emerge," analysts at Barclays Capital wrote in a a research note.

European blue chips jumped 1.4%, while the euro rose 0.47% to $1.39.  The dollar fell 0.39% against a basket of world currencies.

There are no major American economic releases slated for release on Monday, however, traders did get encouraging manufacturing data from China.  HSBC's gauge of Chinese manufacturing rose to 51.1 in October from 49.9 in September, marking the first rise since March.  Readings above 50 point to expansion, while those below indicate contraction.

However, data from Europe showed that manufacturing there contracted more than expected over the same period.

Energy markets were in the green amid a weak dollar and strong Chinese manufacturing data.  Light, sweet crude soared $3.87, or 4.4%, to $91.27 a barrel.  Wholesale RBOB gasoline rose less than a penny to $2.69 a gallon.

Gold jumped $16.40, or 1%, to $1,652 a troy ounce.  Treasury yields edged higher.  The benchmark 10-year note yielded 2.230% from 2.219%.

Corporate News

Federal Express (NYSE:FDX) says it expects to move a 260 million packages this holiday season, a 12% increase from last year.  The shipping company also plans on hiring 20,000 seasonal workers.

Kimberly-Clark (NYSE:KMB), the maker of Kleenex tissues, posted an 8% drop in its quarterly profits, meeting analysts' expectations.

Foreign Markets

The Euro Stoxx 50 jumped 1.4% to 2,369, the English FTSE 100 rose 1.1% to 5,548 and the German DAX gained 1.4% to 6,055.

In Asia, the Japanese Nikkei 225 jumped 1.9% to 8,844 and the Chinese Hang Seng spiked 4.1% to 18,772.