Stocks extend rally as worries over CIT ease

NEW YORK -- The stock market is extending a big rally from last week on more upbeat earnings and word that troubled lender CIT will avoid bankruptcy.

The advance pushed the Dow Jones industrials back into the black for the year and the Standard & Poor's 500 index to its highest finish since November.

News that CIT Group struck a deal with its bondholders helped stoke the market's optimism, which got a big boost last week from a string of good earnings news.

The Dow was up 104.21, or 1.2%, to 8,848.15, surpassing a high of 8,799 hit in June. The S&P 500 index rose 10.75, or 1.1%, to 951.13, edging out its high in June of 946.21. The Nasdaq composite index rose 22.68, or 1.2%, to 1,909.29. The Dow and the S&P 500 are coming off their best weekly performance since a spring rally began in March.

CIT's future was cast in doubt after negotiations with federal regulators for bailout funds fell through. Its failure would have been a blow to investor confidence and would have hurt industries like retailing, which has suppliers who rely on CIT for financing.

A bigger-than-expected rise in a predictor of future economic activity also supported stocks. The Conference Board's index of leading economic indicators rose 0.7% in June, more than the 0.4% forecast. It was the third straight month of increases.

"The main reason the market has been fairly strong is we haven't had any major disappointments in earnings," said Joe Keetle, senior wealth manager at Dawson Wealth Management.