Dow hits all-time high

NEW YORK (CNNMoney.com) -- Stocks surged Monday afternoon, with the Dow touching an all-time high above 14,110 as investors shrugged off a profit warning from Citigroup and instead focused on the possibility of more Fed rate cuts.

The Dow Jones industrial average (Charts) added around 210 points with an hour left in the session, rising as high as 14,111.53 and setting a new all-time intra-day high. The previous intra-day high was 14,021.95 from July 19.

The broader S&P 500 (Charts) index and the tech-fueled Nasdaq composite (Charts) both gained 1.3 percent. The Russell 2000 (Charts) small-cap index jumped more than 2 percent.

"You're seeing a continuation of the recent momentum," said Chris Johnson, CEO of Johnson Research Group. "There was unfavorable news in the financial arena, but the market is still rallying, which tells you that investors are afraid of getting left behind."

Investors were also perhaps reacting to hopes that any so-called "bad news," whether it be weak bank earnings or a dip in the ISM index, means that the Federal Reserve is more likely to cut interest rates again at its next policy meeting scheduled for the end of the month.

Stock gains were broad based on the first day of the fourth quarter, with 27 out of 30 Dow issues rising, led by Citigroup (Charts, Fortune 500).

Citigroup stock rose, even after the company warned that its third-quarter earnings could slump 60 percent because of $3 billion in write-downs the company had to take due to subprime-backed securities.

Swiss bank UBS (Charts) said it will take a $3.4 billion write-down in the third quarter and post a quarterly loss, because of subprime-related losses. UBS shares rose 2 percent.

But investors may have taken comfort that Citigroup and UBS' news wasn't even worse, considering the level of fear about the impact of the subprime fallout.

A variety of bank stocks rose, boosting the Amex Securities Broker/Dealer index by 2 percent.

The weak bank sector news was also partly tempered by Nokia's (Charts) bid to purchase navigation-software maker Navteq for $8.1 billion. Typically, big deal announcements support the broader market as they are seen as a sign of corporate confidence.

Pulte Homes (Charts, Fortune 500), Centex (Charts, Fortune 500) and Lennar (Charts, Fortune 500) rallied after Citigroup upgraded them to "buy" from "hold" as part of a broader note on the homebuilding sector.

Intel (Charts, Fortune 500), Apple (Charts, Fortune 500), Applied Materials (Charts, Fortune 500) and Micron Technology (Charts, Fortune 500) were among the big cap stocks rising.

On the downside, Walgreen (Charts, Fortune 500) reported quarterly profit that was short of forecasts, sending shares tanking in active New York Stock Exchange trade.

Acxiom (Charts) said that the private equity firms that had agreed to buy the data management company for $2.25 billion have backed out of the deal.

Market breadth was positive. On the New York Stock Exchange, winners topped losers 3 to 1 on volume of 810 million shares. On the Nasdaq, advancers topped decliners 2 to 1 as 1.19 billion shares changed hands.

In economic news, the Institute for Supply Management said its September manufacturing index fell to 52.0 from 52.9 the previous month. Economists surveyed by Briefing.com thought it would fall to 52.5.

Stocks eased Friday at the end of a strong week and month on Wall Street. It was also the last day of a tumultuous third quarter that saw the major gauges ultimately post gains after the Federal Reserve cut interest rates for the first time in four years.

Oil prices fell Monday. U.S. light crude for November delivery lost $1.61 to $80.05 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery rose $3.20 to $753.20 an ounce.

Treasury prices inched higher, lowering the yield on the 10-year note to 4.57 percent from 4.58 percent late Friday. Bond prices and yields move in opposite directions.

In currency trading, the dollar neared another all-time low versus the euro and inched higher versus the yen.