Stocks End Sharply Higher As Deal To Help Automakers Takes Shape

NEW YORK (MarketWatch) -- U.S. stocks climbed Monday, with the Dow Jones Industrial Average closing at its highest level in a month, as investors cheered President-elect Barack Obama's pledge of massive infrastructure investment and a likely deal for the auto industry.

"It looks like a bailout for the automakers is in the works. [And] over the weekend, Obama laid out a government-funded work program that would be the largest since the 1950s, which is stirring the bulls this a.m.," said Marc Pado, U.S. market strategist at Cantor Fitzgerald. .

After climbing above the 9,000 level for the first time since Nov. 10, the Dow Jones Industrial Average ended at 8,934.18, up 298.72 points or 3.5%. The finish is the highest close for the Dow since Nov. 7, when it ended at 8,943.81.

Twenty-three of the blue-chip index's 30 components finished in the black, led by General Motors Corp. , up 20.8%. A deal on as much as $17 billion in loans for the struggling Big Three automakers may come as soon as Monday, according to White House press secretary Dana Perino.

Off the Dow, shares of Ford Motor Co. climbed 24.3%.

Shares of McDonald's Corp. fell 2.9% after the fast-food giant posted healthy November sales increases in the U.S. and abroad.

The Dow's laggards included 3M Co. , which was off 4.1% after the Post-it note maker lowered its earnings outlook for the year and said it cut almost 1,800 jobs in the fourth quarter to cut costs.

The S&P 500 jumped 33.63 points, or 3.8%, to 909.7, with energy, materials and financials fronting the gains among the index's 10 industry groups.

Standouts in the energy sector included Chesapeake Energy Corp. , up 24.4%, after the natural gas company canceled plans to issue stock and cut back its capital spending, saying it has more than enough cash on hand. .

Oil futures climbed more than 7%, buoyed by expectations that OPEC might substantially cut production. Crude for January delivery gained $2.90, or 7.1%, to end at $43.71 a barrel on the New York Mercantile Exchange.

Elsewhere on Nymex, gold for January delivery ended up $17.10 at $769.30 an ounce.

Heavy metal

Top machinery companies rallied along with the broader market, with shares of the Manitowoc Co. Inc. gaining 18.1% and Jacobs Engineering Group Inc. rising 15.2%.

The Nasdaq Composite gained 62.43 points, or 4.1%, to 1,571.74.

Volume on the New York Stock Exchange topped 1,7 billion, and advancing stocks outpaced those declining more than 3 to 1. On the Nasdaq, 975 million shares exchanged hands, and advancers beat decliners nearly 3 to 1.

Following a sharp payrolls-inspired fall in early trading Friday, U.S. stocks bounced higher after insurer Hartford Financial Services Group lifted its earnings forecast for the year.

In Monday's action, shares of Hartford Financial rose 1.8%, climbing with other insurers. .

MetLife Inc. fell 2.4% after the insurer said it expects to report fourth-quarter net income of $1.50 to $2.55 a share, having amassed up to $1.8 billion of investment gains. Analysts had been expecting earnings of 80 cents a share.

Dow Chemical Co. said it would cut about 5,000 full-time jobs, or about 11% of its global workforce, to address "current economic realities." .

The economy's troubles could also be seen in the media sector, with the Tribune Co. reportedly filing for bankruptcy protection, and the New York Times Co. planning to borrow against its Manhattan headquarters building to offset cash-flow worries.

Overseas, shares in Europe rose sharply, as oil majors and financials fronted a broad-based advance. .

Asian stocks soared, with Hong Kong's benchmark stock index climbing more than 8%.

By Kate Gibson