Market Watch: Post-GM Bankrupcy Edition

With GM's bankruptcy filing splashed all over TV screens on Monday, at first I found it hard to believe that the stock tickers were full of green arrows. Yet it was so.

Despite the damper of GM's bankruptcy, U.S. stocks made a huge rally Monday, with the Standard & Poor's 500 Index shooting to a seven-month high. A hard pill to swallow, but proof that the auto industry no longer holds the economic sway it once did.

So what caused the rally? Several reports on personal income, manufacturing and construction turned out better than expected, according to Bloomberg.

Further proof of the globalization of the economic world, the stock jump in the U.S. was part of a global rally triggered by a report that China's manufacturing grew for the third month in May. While U.S. manufacturing continues to shrink, new reports Monday showed that the shrinkage rate in April was the lowest in eight months. Construction spending also unexpectedly rose last month.

Oil also saw green in the charts on Monday after China raised its domestic gasoline and diesel prices and reported an expansion in manufacturing. China consumes the second-most energy in the world. These announcements spurred crude oil to rise for the sixth day, reaching a seven-month high of $68.42 a barrel on the New York Mercantile Exchange.

Oil companies also had a good day, with Exxon Mobil Corp. rising 3.5 percent to $71.76 and Chevron Corp. picking up 3.8 percent to settle at $69.21.

The construction and raw materials sectors also saw big gains. The Reuters/Jefferies CRB Index of raw materials jumped 3.1 percent. Copper climbed 5.5 percent to a seven-month high. The largest U.S. aluminum producer, Alcoa, gained 6.6 percent to reach $9.83, while Freeport-McMoRan Copper & Gold Inc. picked up 6.8 percent to hit $58.12.

Construction companies saw a surge after the U.S. construction market saw unexpected increases in spending in April with the letup of the housing slump. According to the Commerce Department, the 0.8 percent increase was the largest since August.

With the S&P 500's 2.6 percent surge, it closed at 942.87, higher than any other day since Nov. 5. The Dow rallied 221.11 points, or 2.6 percent, settling at 8,721.44, or the highest since Jan. 8. Analysts are saying this is a bullish trend, with the S&P 500 closing above its average price for the past 200 days for the first time since December 2007, as of Monday.

Incidentally, GM shares remained unchanged at 75 cents despite its bankruptcy filing. In the markets, that was already old news before it even happened.