Stocks end higher, extend last week?s rally

By NBC News wire services

Updated at 4:05 p.m. ET: Stocks closed higher Monday, extending last week's rally on the hope for more European Central Bank assistance for the troubled euro zone.

Earlier, the S&P 500 rose to its highest point since early May and approached 1,400 -- a psychologically important level that could spur further buying if convincingly breached. The S&P hasn't closed above that level since May 2.

Sentiment in Spanish and Italian debt markets -- forefronts of the three-year debt crisis -- improved, with two-year Spanish yields falling to 3.42 percent on Monday, less than half of a late July high of over 7 percent.

European Central Bank President Mario Draghi has said the ECB plans to buy short-dated bonds to lower borrowing costs to help Europe, which has been mired in a debt disaster. European shares closed at four-month highs.

"Nothing has been fixed in Europe, but things seem to be getting better and it seems unlikely that there will be any kind of real blow-up," said John Manley, chief equity strategist at Wells Fargo Funds Management in New York. "I'm worried I may be too bearish."

Manley said he saw the S&P 500 trading in a range between 1,250 and 1,450, "which will likely persist for a while, with continued huge volatility."

Wall Street rallied on Friday with the S&P 500 marking its fourth straight week of gains on a strong U.S. jobs report and renewed hope that European authorities would act to contain the euro zone's debt crisis through ECB purchases of Italian and Spanish bonds.

Meanwhile, a group of investors will rescue embattled market maker Knight Capital Group Inc in a $400 million deal that keeps the company in business, Knight said on Monday. But it comes at a huge cost to investors and the stock fell.

Utilities, considered a defensive play, were the day's weakest, trading at breakeven levels.

Best Buy shares jumped after Richard Schulze, the founder and former chairman, offered to buy the shares he does not already own in the electronics retailer for $24 to $26 each.

Cognizant Technology Solutions Corp shares rose after the information technology services provider raised its full-year adjusted profit forecast.

Of the 411 companies in the S&P 500 that have reported second-quarter earnings through Monday morning, 67.4 percent have reported earnings above analysts' expectations, near the four-quarter average of 68 percent, according to Thomson Reuters data.

Reuters contributed to this report.

It was a year ago today that Standard & Poor's stripped the U.S. of its coveted AAA debt rating. CNBC's Zachary Karabell, Dan Greenhaus, Michael Farr & Rick Santelli offer insight on the market rally.

Source: http://marketday.nbcnews.com/_news/2012/08/06/13147888-stocks-end-higher-extend-last-weeks-rally?lite

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