Stocks bounced back from their worst week ever as investors cheered a global cash infusion designed to help avoid a global meltdown.
The Dow Jones Industrial Averagewas up nearly 600 points, or about 7 percent. The S&P 500and Nasdaqwere up more than 7 percent.
At this rate, the Dow is on track for its biggest one-day point gain ever. The record is a gain of 499.2 points, set on March 16, 2000.
Markets in Asia advanced, while markets in Europe rallied 10 percent, their biggest one-day percentage gain on record, after major central banks pledged to lend unlimited amounts of dollars to commercial banks to unfreeze credit markets and after the U.K. announced plans to bail out three major banks — Royal Bank of Scotland, HBOS and Lloyds.
Monday's rally was a welcome reprieve after the Dow last week fell 1,874 points, or more than 18 percent, the worst point and percent drop in market history.
After the stomach-churning drops of recent weeks, a curious byproduct: Traders are actually saying openly that the bottom is in. Typically, no one wants to be within a 500-mile radius of calling the bottom.
"You will probably see a few more declines but we're beginning to see the bottomof this and so the opportunities are quite interesting, quite attractive," Mark Mobius, lead portfolio manager at Templeton and an emerging-markets specialist, told CNBC.
Bill Smith, president, CEO and senior portfolio manager at SAM Advisors, agrees that we've seen the bottom and says if you have the guts, now is the time to buystocks like Research In Motion and Apple .
Investors were on it: Shares of both Apple and Research In Motion jumped more than 8 percent.
Apple benefited from buzz that the company might announce a sub-$1,000 laptopon Tuesday as well as an analyst upgrade. Citigroup raised its rating on Apple to "market weight" from "underweight."
Other market pros said this is just a bear-market rally, a spate of buying in a generally downward-moving market.
Trading was expected to be light today as the bond market was closed for the Columbus Day holiday.
General Motors was the biggest gainer on the Dow, surging more than 30 percent following news that the struggling auto maker is fishing around for a merger partner. GM approached Ford about a possible merger in July but Ford rejected the idea, the New York Times reported. Now, GM is in preliminary talks with Chrysler's owner, the private-equity firm Cerberus Capital Management.
Only two of the 30 Dow stocks were lower: General Electric and JPMorgan .
Morgan Stanley shot up more than 50 percent following news that Mitsubishi UFJ Financial Group has acquired $7.8 billion of perpetual non-cumulative convertible preferred stock with a 10 percent dividend and a conversion price of $25.25 per share, and $1.2 billion of perpetual non-cumulative non-convertible preferred stock with a 10 percent dividend.
The continued turmoil in the financial markets could spark a wave of mergers among banks and remaining brokerage firms in the coming weeks, Wall Street executives told CNBC.
Shares of Sovereign Bancorp fell 4 percent after an initial uptick following news that Spain's largest bank, Santander, is in talks to buy the U.S. bank, though no deal has yet been reached, Santander said.
Wachovia shares rose but Wells Fargo slipped after the Federal Reserve said Sunday that it has approved Wells Fargo's takeover ofWachovia and its banking subsidiaries. Citigroup, which dropped out of the battle to take over Wachovia last week, saw its shares advance 4 percent.
Oil was up nearly $4 a barrel, trading just north of $80 a barrel , as the coordinated government action spurred a rally in commodities in addition to stocks.
But Goldman Sachs,the biggest oil trader on Wall Street, said the financial crisis has already done so much damage to commodity demand that oil could drop to $50 a barrel.
MONDAY: Bond market closed for Columbus Day holiday; stock market is open.
TUESDAY: Earnings from Johnson & Johnson, Pepsi
WEDNESDAY: Weekly mortgage applications; Empire State manufacturing survey; PPI; retail sales; business inventories; weekly crude inventories; Fed's beige book; Earnings from Abbott Labs, Coca-Cola, JPMorgan, Wells Fargo and eBay
THURSDAY: CPI; weekly jobless claims; industrial production; Philly Fed survey; weekly natural-gas inventories; Earnings from Bank of New York Mellon, BB&T, Citigroup, CIT Group, Continental, Harley-Davidson, Hershey, Merrill Lynch, Nokia, PNC Bank, Southwest Air, United Technologies, AMD, Capital One, Google and IBM
FRIDAY: Housing starts; consumer sentiment; Earnings from Gannett, Honeywell and Sony Ericsson
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