Stocks recharge the run

When Wall Street nearly collapsed

Would panic prevail? That was the question gripping the world in the days surrounding the fall of Lehman Brothers on Sept. 15, 2008. One year after that terrifying Monday, the people who struggled to cope with the financial crisis share what they were thinking as chaos broke out.

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NEW YORK (CNNMoney.com) -- Stocks rallied Monday, with the Dow, S&P 500 and Nasdaq all gaining at least 1%, as investors used a two-week selloff as an opportunity to jump back into the market.

A better-than-expected reading on the services sector of the economy and strong demand for Treasury's first bond auction of the week bolstered the broad-based gains.

The Dow Jones industrial average (INDU) rose 112 points, or 1.2%. The S&P 500 (SPX) index gained 15 points, or 1.5% and the Nasdaq composite (COMP) rose 20 points, or 1%.

Bank stocks led the advance, with Bank of America (BAC, Fortune 500) up 3.8%, JPMorgan Chase (JPM, Fortune 500) up 4.6% and Wells Fargo (WFC, Fortune 500) up 6.9%. The KBW Banking (BKX) index added 3.2%.

A roughly seven-month-long rally hit a roadblock at the end of September, with stocks falling for two straight weeks, and the major gauges losing around 5%. The declines were driven by a series of weaker-than-expected economic reports on housing, manufacturing, consumer confidence and employment.

The weak batch of reports marked a reversal after a period of steadily improving economic news. That raised more worries that the rally has gotten ahead of the recovery. Still, the declines over the last two weeks were pretty minimal, considering the runup that preceded them.

"I think the underlying trend of the market is still positive, despite the last two weeks," said Ted Weisberg, NYSE Floor Trader at Seaport Securities. "You're seeing that start to reassert itself today."

He said that the last two weeks of the old quarter and first two of the new one are typically something of a Never Never Land for the market, as investors await results and focus 100% on economic news. He said that this was true in the month surrounding the end of the second quarter and start of the third in July and it appears to be true again now.

"The risk, as we've seen over the last few weeks, is that the news can be less than terrific, making markets vulnerable," he said. "That's particularly the case after the kind of rally we've seen."

Since bottoming at a 12-year low March 9, the S&P 500 has gained 51.2%, and the Dow has gained 45% as of Monday's close. After hitting a six-year low, the Nasdaq has gained nearly 61%.

In the third quarter alone, the S&P 500 index and the Dow both jumped 15%, the best quarterly performance in a decade. The Nasdaq jumped 15.7%, its best quarterly performance since 2003.

Results on tap: The wave of third-quarter earnings reports due in the week ahead will determine whether the selloff continues or proves to be an entry point for more buyers. Alcoa unofficially begins the third-quarter reporting period Wednesday, as it usually does. The Dow aluminum maker is due to report a quarterly loss versus a profit a year ago, reflecting a weak materials sector.

Overall, S&P 500 profits are expected to have dropped almost 25% from the third quarter of 2008.

On the move: In addition to financials, the Dow's other big gainers included Boeing (BA, Fortune 500), United Technologies (UTX, Fortune 500), 3M (MMM, Fortune 500), Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500) and Hewlett-Packard (HPQ, Fortune 500). Of the 30 Dow components, 25 gained.

Among stock movers, Brocade Communications (BRCD) rallied 18.8% in unusually active trading on reports that it has put itself up for sale. Both Hewlett-Packard and Oracle (ORCL, Fortune 500) were cited as potential buyers, according to the Wall Street Journal.

Economy: The Institute for Supply Management's services sector index rose to 50.9 in September from 48.4 in August. Economists surveyed by Briefing.com thought it would rise to 50.0.

World markets: Global markets were mixed. In Europe, London's FTSE 100, France's CAC 40 and Germany's DAX all gained around 0.7%. Asian markets were mixed, with the Hong Kong Hang Seng higher and the Japanese Nikkei lower.

Currency and commodities: The dollar tumbled versus the euro and the yen, resuming its recent plunge against a basket of currencies.

U.S. light crude oil for October delivery rose 46 cents to $70.41 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery rose $13.50 to settle at $1,017.80 an ounce. Gold closed at a record high of $1,020.20 two weeks ago.

Bonds: Treasury prices fell late Monday, with the yield on the 10-year note sticking at 3.22%. Treasury prices and yields move in opposite directions. The government's sale of $7 billion in 10-year Treasury Inflation Protected Securities (TIPS) saw strong demand, a good sign at the start of a week that brings $78 billion in debt auctions.

Market breadth was positive. On the New York Stock Exchange, winners beat losers five to one on volume of 1.12 billion shares. On the Nasdaq, decliners topped advancers by over two to one on volume of 2.21 billion shares.