Overnight Markets: US stocks end higher in late-day rally

Wall Street gained on Monday, with the Dow Jones Industrial Average reaching its highest level since 2007, as speculation the Federal Reserve will continue stimulus measures overshadowed concern over spending cuts and China’s economy.

The Dow Jones industrial average rose 38 points, or 0.27%, to 14,128 at the close. The Standard & Poor's 500 Index gained seven points, or 0.46%, to 1,525. The Nasdaq Composite Index added 12 points, or 0.39%, to end at 3,182.

Equities declined early in the trading day as China’s services industries expanded last month at the slowest pace since September.

But later, shares gained after Fed Vice-Chairman Janet Yellen said the US central bank should press on with $85 billion in monthly bond buying while tracking possible costs and risks from the unprecedented programme.

Airlines rallied while industrial and energy stocks declined as oil dropped to its lowest level since December. Delta Air Lines Inc. surged 5.6%, while United Continental Holdings Inc. climbed 5.3%. Caterpillar Inc. retreated 1.8%.

Industrial and material shares were among the weakest of the day, with Caterpillar Inc off 1.8% at and Alcoa Inc down 1.1%.

Google shares touched a lifetime intraday high of $822.84, closing up 1.9% at $821.50. Yahoo! Inc. jumped 3.5% after an analyst at Barclays raised his rating on the company. Apple Inc. retreated 2.4% to its lowest level in more than a year.

Retail stocks ranked among the strongest of the day after Deutsche Bank raised price targets on Target Corp and Macy's Inc. Target climbed 3.6%, while Macy's rose 2.1%. The S&P retail index jumped 1.5%.

Bucking the trend was J.C. Penney Co, which is struggling to compete against its rivals. J.C. Penney's stock fell 5.4%.

Hess Corp rose 3.5% after the company said it will exit its retail, energy marketing, and energy trading businesses.