US STOCKS-Wall St up on Midwest data, regulatory overhaul plan

(Updates to midday, changes byline)

By Cal Mankowski

NEW YORK, March 31 (Reuters) - U.S. stocks rose on Monday after a report showing stronger-than-expected Midwestern business activity and the formal announcement by Bush administration officials of a plan for a major overhaul of the regulation of U.S. financial markets.

Despite the gains on the last day of the first quarter, the U.S. stock market was headed for its worst quarterly performance in 5-1/2 years.

While financial and telecommunications stocks helped lead the advance, drug makers Schering Plough Corp SGP.N and Merck & Co (MRK.N: Quote, Profile, Research) tumbled after an expert panel recommended patients try a generic statin to lower cholesterol before using the two companies' jointly developed medicines, Vytorin and Zetia. For details, see [ID:nN31364249].

The National Association of Purchasing Management-Chicago index, also known as the Chicago PMI, showed business activity in the Midwest had contracted less than economists had forecast. [ID:nNAT003869].

"You had a better-than-expected Chicago PMI number," said Phil Orlando, chief equity market strategist at Federated Investors in New York. "I think the more important backdrop is the proposal that (Treasury Secretary) Paulson and the administration are making in terms of changing financial services industry oversight. It looks like the market is taking it fairly well."

The Dow Jones industrial average .DJI gained 61.63 points, or 0.50 percent, to 12,278.03. The Standard & Poor's 500 Index .SPX rose 7.93 points, or 0.60 percent, to 1,323.15 and the Nasdaq Composite Index .IXIC jumped 14.10 points, or 0.62 percent, to 2,275.28.

JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) shares gained 2.7 percent to $43.84, leading the Dow industrials and among the S&P's major gainers. An S&P index of financial shares shot up 1.6 percent.