NEW YORK (CNNMoney.com) -- Wall Street rose Monday, pushing the major gauges to multi-month highs, as a better-than-expected housing market report intensified hopes that the economy is closer to stabilizing.

The Dow Jones industrial average (INDU) gained 214 points, or 2.6%, ending at the highest point since Jan. 13. The S&P 500 (SPX) index added nearly 30 points or 3.4%, ending above 900 for the first time since Jan. 8 and turning higher for the year.

The Nasdaq composite (COMP) rose 44 points, or 2.6% and ended at the highest point since Nov. 4.

Stocks have been surging -- since bottoming on March 9 -- on bets that the worst for the economy is over. Those bets were furthered Monday by the day's economic news.

The March pending home sales index from the National Association of Realtors jumped 3.2% from February, surprising economists who were looking for the index to hold steady.

"If you subscribe to the theory that the global economic crisis started with the U.S. housing market and will end there, you're going to be encouraged by reports like this that suggest housing is bottoming," said Kevin D. Mahn, managing director at Hennion & Walsh.

Another report, from the government, showed construction spending rose 0.3% versus forecasts for a decline of 1.6%. Spending fell 1% in February.

Mahn said investors were also responding well to weekend comments from Berkshire Hathaway (BRK.A)'s Warren Buffett, who said he sees the recession ending soon and predicts that no big bank will fail. He also talked up Wells Fargo (WFC, Fortune 500), one of Berkshire's largest holdings.

Speaking at the company's annual meeting, Buffett also said Berkshire will post a first-quarter operating profit.

Stocks are coming off a strong April, in which the S&P 500 spiked 9.4%, the Dow gained 7.3% and the Nasdaq jumped 12.3%. The S&P 500 and Dow have gained for seven of the past eight weeks; the Nasdaq has jumped eight weeks in a row.

While the move has been positive and has coincided with some improved results, there are still enough roadblocks for the market that analysts are wary to say the bear market is over.

"The rally has been encouraging and we certainly have a lot of the ingredients for a bull market, but we need another big push for that to happen," said Jack Ablin, chief investment officer at Harris Private Bank.

Tuesday brings readings on the services sector of the economy and a profit report from Walt Disney. Also Tuesday: Federal Reserve Chairman Ben Bernanke gives his economic outlook before the Joint Economic Committee.

Banks: Financial shares are likely to be choppy ahead of the release of the government's "stress tests" on Thursday. The government will release details on the 19 individual companies tested as well as the broad group of corporations.

The results are expected to include estimated loan losses in the event that the economy deteriorates further, along with an estimate of how much more capital banks would need to raise in such an environment.

Citigroup (C, Fortune 500) is reportedly among the banks that will need to generate more money to stay afloat. The bank may have to raise another $10 billion, according to the Wall Street Journal.

Bank of America (BAC, Fortune 500) shot down reports in the Financial Times that it has been told by the government that it needs to raise $10 billion in fresh capital.

Wells Fargo has reportedly been asked to raise additional money as the result of preliminary stress tests.

However, shares of the three companies rallied, along with the rest of the bank sector, as investors took the news in stride. The KBW Bank (BKX) sector index gained 14.7%.

Corporate news: Sprint Nextel (S, Fortune 500) reported a quarterly profit, excluding items, surprising analysts who were looking for a quarterly loss. Shares gained 8%.

Gains were broad based with 27 of 30 Dow stocks rising, led by IBM (IBM, Fortune 500), Boeing (BA, Fortune 500), United Technologies (UTX, Fortune 500) and Johnson & Johnson (JNJ, Fortune 500).

Market breadth was positive. On the New York Stock Exchange, winners topped losers four to one on volume of 1.10 billion shares. On the Nasdaq, advancers topped decliners three to one on volume of 2.07 billion shares.

Bonds: Treasury prices were little changed, with the yield on the benchmark 10-year note at 3.15%, little changed from Friday. Treasury prices and yields move in opposite directions.

Other markets: In global trading, Asian markets ended higher and European markets mostly ended higher.

In currency trading, the dollar fell versus the euro and gained against the yen.

U.S. light crude oil for June delivery rose $1.27 to settle at $54.77 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $14 to settle at $902.20 an ounce. 

NEW YORK (CNNMoney.com) -- Bankers are bracing for additional losses this year across a wide variety of loan categories, according to a report published Monday by the Federal Reserve, as the nation continues to suffer under the weight of a painful recession.

In the central bank's latest survey of loan officers, more than 90% of domestic lenders warned of further deterioration across such loan portfolios as credit cards, commercial real estate and non-traditional mortgages.

The threat of rising loan losses, which remains the biggest headwind for the nation's banking industry going forward, comes as industry regulators are poised to report the results of "stress tests" of the nation's 19 largest financial institutions later this week.

Some large financial institutions -- including Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500) and Wells Fargo (WFC, Fortune 500) -- are believed to require additional capital as a result of regulators' findings, according to recent reports.

Hoping to minimize their exposure to future losses, senior loan officers at many financial institutions acknowledged that credit continued to remain tight during the first quarter.

Nearly 60% of those surveyed said they tightened their lending standards on credit cards, which was unchanged from when the Fed last delivered its reading on bank lending in February.

Lending standards on prime mortgages also remained elevated, even as demand for prime mortgages surged, according to the Fed.

Banks also moved to rein in existing lines of credit to both U.S. businesses and households during the latest quarter.

About 65% of loan officers surveyed said they had lowered credit limits to either new or existing credit card customers over the last three months.

Banks' willingness to lend money has become a focal point in the ongoing crisis as the U.S. government has provided a massive amount of aid to financial firms in an effort to get credit flowing again.

Despite criticisms from both lawmakers and taxpayers, industry executives maintain they are still making new loans and extending existing credit lines to both consumers and businesses.

Banks have also cited weakened demand for a variety of consumer and business loans, which was once again evident in Monday's survey. 

In the opening minutes, the Dow Jones industrial average rose 62 points, or 0.8%. The Standard & Poor's 500 and Nasdaq-100 were about two-thirds of a percent higher.

Peter Cardillo, chief market economist for Avalon Partners, said that trading this week will be "choppy" ahead of the government stress tests on the banking sector, as well as the job market reports on Friday.

Economy: Investors will look to a report on March construction spending, which is due out at 10 a.m. ET. A reading on pending home sales also comes out at 10 a.m.

Banks: Investors are awaiting the release of the results of the U.S. government's so-called stress tests on banks, which are due out this week.

Citigroup (C, Fortune 500) is among the big banks that reportedly may need to raise capital. According to the Wall Street Journal, the bank may need to generate another $10 billion.

Autos: Italian carmaker Fiat, which recently completed an alliance with Chrysler, is eyeing a deal with the European unit of General Motors (GM, Fortune 500).

Companies: Shareholders descended upon Berkshire Hathaway's (BRK.A) annual meeting over the weekend. At the meeting, chief executive Warren Buffett said the firm expects to report a first-quarter operating profit.

Sprint Nextel (S, Fortune 500) reported surprise income excluding unusual items. Shares rose nearly 13% in early trading.

World markets: Stocks in Asia rallied, with shares in Taiwan surging. Markets in Japan were closed. Most European markets also rose in morning trading. U.K. markets were closed for a holiday.

Oil and money: The dollar strengthened against major international currencies, including the euro, the yen and the British pound. Oil rose 30 cents to $53.50 per barrel

HONG KONG (Reuters) -- Asian stocks punched to a seven-month peak on Monday, fueled by confidence the global economy is recovering faster than expected and a further jump in Taiwanese shares on hopes for an influx of Chinese investment.

Taiwan's benchmark TAIEX index soared 5.6%, taking gains to 12.8% in just two days as investors see a a wide-reaching deal coming later in the year that would spur heavy Chinese investment in the island, especially in financial firms.

The surge in Taiwan added to the broad gains across Asia as evidence has mounted that global trade is starting to pick up, highlighted by brokerage CLSA's gauge of Chinese manufacturing activity rebounding to a nine-month high in April.

Investors have largely brushed aside worries that the global H1N1 flu outbreak could turn into a serious pandemic.

"The flu fears seem to be fading as the danger of it spreading seems to be lower now. On the other hand, we have China's PMI data, which seems to signal continued recovery for the economy, yet another reason to stay bullish," said Castor Pang, strategist with Sun Hung Kai Financial in Hong Kong.

The Australian dollar, seen as the currency market's bellwether for risk-taking, struck a seven-month peak. Oil and gold prices edged up, while safe-haven government bonds retreated.

Data last week in Asia showed South Korean exports and industrial production both improving more quickly than expected, suggesting that regional exporters are needing to step up activity after having aggressively slashed inventories of goods.

The U.S. Institute for Supply Management's factory survey on Friday also showed a jump in the new orders index, an important leading indicator adding to the evidence of a recovery taking shape.

"The global manufacturing cycle appears to be gaining momentum," said economists at Societe Generale in a note to clients.

Investors are also feeling more confident that the U.S. financial system has already suffered the worst of its crisis and is getting healthier, just before the government releases the results of stress tests later this week.

The MSCI index of Asia-Pacific shares outside Japan was up 4.6%, its highest level since mid-October and taking its two-month rally to 45% from the low hit in early March. Financial and technology shares powered the rise.

Foreign investors have seized on the rally as an opportunity to allocate more funds to Asia. Fund tracker EPFR Global said that Asia ex-Japan equity funds were the main emerging markets money magnet during the week ending last Wednesday.

On Friday the U.S. S&P 500 edged up 0.5%, and S&P futures were pointing to a further rise on Monday.

Trading was active even with Japanese financial markets closed on Monday for the first of three straight holidays, part of the country's Golden Week break. Many other markets in the region reopened after labor day holidays.

The Australian dollar was up 0.7% at $0.7353 after hitting a seven-month high of $0.7390 as market players favored the currency still offering a 3% yield in a world where U.S. and Japanese short-term yields are pinned near zero.

The dollar edged up 0.3% against the yen to ¥99.44 but was down against most other major currencies as safe-haven flows switched gears. The dollar index was down 0.2%, while the euro was up 0.1% at $1.3300.

The dollar's losses and bets the global economy is slowly reflecting lifted commodity prices. U.S. crude oil inched up 25 cents to $53.45 a barrel, while gold was up $8 an ounce at $893.80.

Government bond yields and swap rates rose further as investors feared missing out on the equity rally and shifted funds away from safe-haven holdings.

In Korea, government bond futures shed 0.55 point to 111.01, the biggest drop in six weeks, as the equity rally and signs of economic improvement offset hopes the country may soon be included in the Citigroup World Government Bond Index.

Last week South Korean lawmakers approved a plan that would give tax advantages to foreign investors in local currency bonds, a step that could pave the wave for it to be included in the Citigroup index tracked by investors managing some $1 trillion in debt.

Benchmark five-year Korean bond yields were up 16 basis points at 4.33% and taking the two-day rise to 26 basis points. Korean swap rates jumped even more quickly, causing swap curves to steepen.