Stocks posted their biggest one-day gain in more than a year, boosted by the bailout package to stem Europe's credit crisis.
The Dow Jones Industrial Average jumped 404.71 points, or 3.9%, to 10785.14, helped by gains in all 30 of its components. The average had its biggest one-day gain in both point and percentage terms since March 23, 2009.
The Standard & Poor's 500-stock index rose 4.4% to 1159.73, led by its financial and consumer-discretionary sectors, up more than 5% each. All the broad measure's other indexes posted gains as well.
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The jump in U.S. stocks followed rallies in the Asian and European markets after the European Union agreed to a €750 billion ($954.83 billion) bailout, including €440 billion of loans from euro-zone governments., €60 billion from a European Union emergency fund and €250 billion from the International Monetary Fund.
In further coordinated efforts to assuage spooked markets, the European Central Bank will go into the secondary market to buy euro-zone national bonds—a step last week that its president, Jean-Claude Trichet, said the central bank didn't even contemplate. Meanwhile, the Federal Reserve, working with other central banks, re-activated swap lines so foreign institutions can get access to loans.
"This bailout plan really avoided the worst-case scenario—it avoided contagion and the domino effect," said Cort Gwon, director of trading strategies of FBN Securities. The package also shifts investors' attention back to the U.S., where most economic yardsticks have been improving lately, he noted.
Stocks soar on "Euro-phoria." WSJ's Emma Moody and Randall Forsyth join the News Hub to discuss. WSJ's David Wessel also joins the set and asks whether Europe's bailout will be enough. Plus, Fannie Mae is asking for an additional $8.4 billion in government aid and President Barack Obama wants to tinker with America's small change.Optimism that global growth is back on track sent industrials rising. Cummins, which makes diesel engines and auto parts, soared 10.4%. Building-products maker Masco jumped 10.8%. United Technologies rose 5.2%.The Nasdaq Composite jumped 109.03 points, its first triple-digit point gain since October 2008. It closed at 2374.67, up 4.8%.Trading volume was higher than the 2010 daily average, though below the frenzied pace of the previous two days, which included an unprecedented "flash crash" and traders' scramble to square their books after certain trades were canceled. On Monday, composite New York Stock Exchange volume hit 7.1 billion shares, below last week's peak near 11 billion.
U.S.-listed shares of European banks surged in reaction to the European Union's bailout plan. Among them, Spain's Banco Santander jumped 23%, Allied Irish Banks PLC climbed 18.8%, Bank of Ireland advanced 16.1% and Barclays PLC rose 17.9%.
Dean Foods tumbled 28.4%. The U.S. dairy processor and distributor's first-quarter earnings profit fell 43%.
Regulators and exchange officials met in Washington on Monday to further discuss what caused last week's 1,000-point intraday plunge and what rule changes might prevent such incidents.
The exchanges also took precautions Monday to make sure the market operated smoothly after futures surged earlier in the morning. Before the market opened, the NYSE invoked a rarely-used rule allowing designated market-makers to not show prices before the bell, making it easier and faster to open stocks.
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Acting together, the exchanges also agreed to double the usual threshold levels for labeling a major swing in a stock's price an erroneous trade between 9:30 and 10 a.m.
The U.S. dollar fell against the euro and the U.S. Dollar Index, which tracks the U.S. currency against a basket of six others, slipped 0.3%. Treasury prices also declined, pushing up the 10-year note's yield to 3.543%. Crude-oil futures snapped a four-day losing streak, rising $1.69 to $76.80 a barrelMake yourself heard
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