Stocks rally on Wall Street

NEW YORK (AP) — The stock market began June with a strong rally, thanks to another wave of benign economic data.

But some investors are nervous that the month, traditionally a weak one for stocks, may not end as well.

Traders homed in Monday on better-than-expected readings on manufacturing, consumer spending and construction spending. The Dow Jones industrial average and other major indexes rose more than 2 percent, and the Standard & Poor’s 500 index and Nasdaq composite rose to their highest levels this year.

The economic data suggested the economy’s decline is moderating, but did not show a rebound. Construction spending rose in April, but personal spending was down slightly. Personal incomes were flat and U.S. manufacturing activity contracted for the 16th straight month in May, although at a slower pace.

Monday also brought General Motors Corp.’s bankruptcy filing, the fourth-largest in U.S. history. The filing didn’t come as a shock, but it did serve as a reminder of the government’s heavy involvement in corporate America after the takeovers of American International Group Inc. and the mortgage giants Freddie Mae and Freddie Mac.

Separately, a trend that had ruffled investors last week — falling Treasury prices and surging yields — resumed Monday, but the stock market shrugged it off. A spike in long-term Treasury yields could drive interest rates on consumer loans higher, potentially threatening an economic recovery.

Despite the appearance that stocks are resuming their climb on hopes for an economic turnaround, a number of analysts think the market has come too far, too fast since hitting 12-year lows in early March.

Analysts pointed out that it wasn’t just economic data that encouraged buying Monday. Technical factors did, too. The first trading day of the month often brings with it a surge of new money from mutual funds, and meanwhile the S&P and Dow broke through their 200-day moving averages for the first time in well over a year. Moving averages are closely watched technical barometers for the market, and some traders will automatically buy or sell if those levels are breached.

According to preliminary calculations, the Dow rose 221.11, or 2.6 percent, to 8,721.44. The Standard & Poor’s 500 index rose 23.73, or 2.6 percent, to 942.87. The Nasdaq composite index rose 54.35, or 3.1 percent, to 1,828.68.