Stocks Motor Out To Monday Gains

The bulls set the pace on Wall Street Monday as June got off to a rousing start thanks to a batch of encouraging economic reports.

Stocks were higher from the open due to an uptick in manufacturing activity in China and news that U.S. consumer spending declined at a slower pace than expected in April. After the open, the Institute for Supply Management reported that U.S. manufacturing contracted less in May than it did the month before, giving the rally a boost.

Monday's gains came despite the formal bankruptcy filing from General Motors . The long-awaited move appears to have been priced in by investors, who showed little concern over the news. GM will need another $30.1 billion from the government, on top of the $19.4 billion lifeline it already got, as it works to ease its debt burden and emerge from bankruptcy leaner. (See "America's Car Company.")

While agreements with bondholders and labor unions should smooth the process for GM, even President Obama admitted the automaker faces a much more complex path than rival Chrysler, which looks set to emerge from Chapter 11 after little more than a month. A bankruptcy judge approved a deal for Italian carmaker Fiat to take over the bulk of Chrysler's assets on Sunday.

If the bankruptcy of two of Detroit's Big Three was not enough to convince investors of the diminished standing of the auto industry on the U.S. economy, there was yet another reminder Monday as Dow Jones removed GM from its 30-stock industrial average. The move was expected and with Cisco Systems replacing GM, the auto industry is not represented on the Dow for the first time since 1925. (See "Say Goodbye To GM.")

Cisco, which will officially be added to the index June 8, was up 5.4%. Ailing bank Citigroup also got bounced from the Dow, which leaped 221 points, or 2.6%, ot 8,721 Monday. The Travelers Companies , an insurance firm that used to be part of Citi, will replace the firm. Travelers shares were up 3.1%; Citi lost 0.8%.

Retail stocks rallied after the consumer spending data and news that personal incomes made a surprise advance of 0.5% in April. Department store chain Macy's surged 15.1%, while discount retailer Wal-Mart , which has withstood the recession better than most, was up 1.7%.

The S&P 500 jumped 24 points, or 2.6%, to 943, Monday to close above its 200-day moving average for the first time in over a year. The Nasdaq paced the major indexes, rising 54 points, or 3.1%, to 1,829.