NEW YORK (CNNMoney.com) -- Stocks surged Monday, starting off a new month with strong gains, as investors welcomed better-than-expected reports on personal income, manufacturing and Exxon Mobil's profit.
Wall Street ended one of the worst months in nearly a year Friday, with the Dow, S&P 500 and Nasdaq all closing at two-month lows. President Obama's plan to restrict trading at big banks, China's bank lending curbs and global debt worries all rattled investors.
But investors used the selloff as an opportunity to get back into stocks Monday, continuing last year's trend.
"People getting in at these levels are assuming that this is another of the mini-corrections we've seen over the last 11 months, but I would be skeptical," said Paul Brigandi, vice president of trading at Direxion Funds.
He said that with the market up more than 50% from the lows of last March, a correction of 10% to 15% was not out of the question. Between the high on Jan. 19 and Friday's lows, the S&P 500 lost just under 7%.
Looking forward, "I think you could see a deeper selloff," Brigandi said.
Gains were broad based, with 28 of 30 Dow components rising, led by Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), IBM (IBM, Fortune 500), McDonald's (MCD, Fortune 500) and Exxon Mobil (XOM, Fortune 500).
Quarterly results: Exxon Mobil reported a profit of $6.05 billion or $1.27 per share, down about 18% from the fourth quarter of 2008 when oil prices were lower and fuel demand was higher. Nonetheless, results topped the forecasts of analysts surveyed by Thomson Reuters.
With around 45% of the S&P 500 having reported results, earnings are currently on track to have risen 206% from a year ago, according to the latest from Thomson Reuters. But the rise is mostly due to cost-cutting and easy comparisons to an abysmal fourth quarter of 2008.
The financial sector in particular is set to bounce back. Strip out financial sector results and earnings are only expected to rise 15%.
Revenue is set to rise about 7% year over year. Without financials, revenue is expected to rise about 2%.
Budget: President Obama unveiled a $3.8 trillion budget for 2011 on Monday that looks to both support the still-fragile economy and temper the nation's growing deficit.
Economy: Personal income rose 0.4% in December, the Commerce Department reported, surprising economists who were looking for an increase of 0.3% on average, according to Briefing.com estimates. Income rose 0.5% in the previous month.
Personal spending rose 0.2% after rising 0.3% in the previous month. Economists thought it would rise 0.3% in December.
The Institute for Supply Management's manufacturing index rose to 58.4 in January from 54.9 in December. Economists thought it would rise to 55.5.
Construction spending fell 1.2% in December, worse than the drop of 0.5% economists were expecting. Spending fell 1.2% in November.
Toyota: On Monday, the company announced plans to fix millions of gas pedals in recalled vehicles and said it has already shipped out parts to dealers.
The fix eliminates the problem that caused pedals to stick, which prompted the recall of 2.3 million vehicles in the United States. Toyota (TM) shares gained 3.8%.
World markets: In overseas trading, Asian markets ended higher, rebounding after last week's selloff. European markets gained, with the London FTSE up 1.1%, the German DAX up 0.8% and the French CAC 40 up 0.6%.
Commodities and the dollar: The dollar fell versus the euro and gained versus the yen.
COMEX gold for February delivery rose $21.30 to settle at $1,104.30 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last month.
U.S. light crude oil for February delivery added $1.54 to settle at $74.53 a barrel on the New York Mercantile Exchange.
Bonds: Treasury prices fell, raising the yield on the 10-year note to 3.65% from 3.58% late Friday. Treasury prices and yields move in opposite directions.
Market breadth was positive. On the New York Stock Exchange, winners beat losers nearly four to one on volume of 1.04 billion shares. On the Nasdaq, advancers beat decliners eight to five on volume of 2.23 billion shares.
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