Dow closes up 254, defies Irene's wrath

So much for Irene. Stock indexes rose sharply Monday after it became clear that the tropical storm caused far less damage than many had feared.

Stocks rose broadly, led by insurers. The Dow Jones industrial average gained more than 230 points in afternoon trading, closing up 254.5 points, 2.3 percent, at 11,539.

Consulting firm Kinetic Analysis Corp. predicted that the claims paid by insurers would be about $2 billion to $3 billion, far less than the $6 billion the industry paid out after Hurricane Isabel struck the region in 2003.

The lower damage estimates pushed insurance stocks higher. Allstate Corp. rose 7.4 percent, Hartford Financial Services Group Inc. rose 12.4 percent, while Travelers Cos. Inc. rose 4.3 percent. Insurance and banking stocks in the Standard & Poor's 500 rose 3.3 percent, the most of the 10 company groups that make up the index.

Utilities companies also rose after it became clear their storm-related expenses would be lower than earlier estimates. Duke Energy Corp., which serves customers in the Carolinas, rose 1.3 percent. New York's biggest utility company, Consolidated Edison Inc., also rose 1.3 percent.

The New York Stock Exchange and other major U.S. exchanges opened as usual Monday after making extensive preparations over the weekend. At the NYSE, executives brought in dozens of cots so employees could sleep there to be ready for the opening bell.

Still volume was low as transit disruptions made it difficult for other Wall Street employees to get to work. Flooding and downed trees obstructed tracks throughout the commuter rail systems that bring workers in from the Connecticut, New York and New Jersey suburbs.

With the close Monday, the Dow Jones industrial average is now down just 0.5 percent for the year. It had been down as much as 7 percent for the year on Aug. 10.

The Standard & Poor's 500 index closed up 33.3, or 2.8 percent, to 1,210.1. The widely used market benchmark has now gained back all of the ground it lost since it hit a 2011 low on Aug. 8, after Standard & Poor's downgraded the U.S. government's credit rating. Since then, it has risen 7.7 percent.

The Nasdaq composite index closed up 82.3, or 3.3 percent, to 2,562.1.

The Russell 2000 index, a benchmark for small companies, rose 32.1 points, or 4.6 percent, to 723.9. That suggested investors were more willing to take on risk. Small-company stocks are more likely to fall in economic downturns, but they also offer the potential of larger gains if the economy does well. The Russell is still down 8.3 percent this year, twice as much as the S&P 500.

An increase in consumer spending also helped push stocks higher. The government reported that spending rose 0.8 percent in July. It was a sharp turnaround from June, when Americans spent less for the first time in nearly two years.