Wall St rallies on infrastructure plan; FedEx falls

By Leah Schnurr

NEW YORK (Reuters) - Stocks rallied to their highest level in a month on Monday on optimism President-elect Barack Obama's proposed infrastructure spending could limit the depth of the year-old recession and on hopes for a government bailout of the three U.S. automakers.

In a second straight day of big gains, the broad S&P 500 pushed into positive territory for the month, giving weight to a growing chorus of market pundits who believe the worst is past for stocks. The U.S. equities market has not posted a monthly gain since August, before the collapse of Lehman Brothers sent the credit crisis into overdrive.

Construction and materials companies poised to profit from a national rebuilding spree fueled the day's gains. Dow component Caterpillar raced up almost 11 percent, while Terex Corp, a maker of mining and building equipment, gained 18 percent.

Investors were also hopeful that a financial lifeline for the three U.S. automakers could be imminent. Shares of General Motors and Ford jumped more than 20 percent and 24 percent, respectively.

"Look at the sectors that are working, anything infrastructure-related is getting a lift," said Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland. "Definitely the people who make 'stuff' is on the on the upside."

The Dow Jones industrial average rose 298.76 points, or 3.46 percent, to 8,934.18. The Standard & Poor's 500 Index climbed 33.63 points, or 3.84 percent, to 909.70. The Nasdaq Composite Index was up 62.43 points, or 4.14 percent, at 1,571.74.

The advance extended the market's rally from an 11-year low on Nov 21. The benchmark S&P 500, which regained the 900 level, is up more than 22 percent since then, but it remains down 38 percent on the year and on pace for its worst year since 1937, when it fell 38.6 percent.

The Dow briefly crossed the 9,000 level for the first time in about a month.

There's "some chance" that markets hit their bottom on November 21, Bob Doll, global chief investment officer for equities at BlackRock, told the Reuters Investment Outlook Summit in New York. "I think we've broken the downtrend and gone sideways."

The view that U.S. stocks have formed a bottom could be put to the test on Tuesday after transport bellwether FedEx Corp cut its full year 2009 earnings outlook after the market close on Monday.

Shares of FedEx were down 8.9 percent at $67.80 in after hours trading, weighing on S&P 500 futures.

Shares of industrial, energy and materials companies benefited from the infrastructure plan and an advance in commodities, including oil, also lifted stocks related to resources.

Shares of Caterpillar, a maker of heavy equipment, climbed 10.9 percent to $42.42 on the New York Stock Exchange, while Terex rose 18 percent to $16.01.

Granite Construction Inc., a civil works contractor, gained 7 percent to $49.09 and was one of eight common stocks on the New York Stock Exchange to hit a 52-week high on Monday. That marked the greatest number to hit a 52-week high in a single day since October 1, according to Reuters data. Granite shares have more then doubled in just seven weeks.

Chevron was up 4.9 percent at $78.09 while the price of oil rose $2.90 to settle at $43.71 a barrel amid the rally in global stock markets and signs of deepening cuts from Saudi Arabia, the world's top crude oil supplier.