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Stocks Rally on China Plan, AIG News

Stocks shot out of the gate Monday, joining the global rally, following news that China plans a massive stimulus plan to recharge the world's fourth-largest economy.

China announced this weekend plans to pump 4 trillion yuan ($586 billion) into its struggling economyin order to boost domestic demand. It also announced a shift in monetary policy, which it described as, "moderately easy."

Asian stocks rallied, with Chinese stocks up more than 7 percent and Japanese stocks up almost 6 percent. European stocks also advanced, with major indexes up more than 2 percent in afternoon trading.

Commodities stocks rallied world-wide amid anticipation that China's plan, which includes investment in infrastructure, will boost demand for raw materials.

Alcoa and Caterpillar were among the top gainers on the Dow Jones Industrial Average.

(Track all 30 Dow stocks.)

American International Group , which is no longer part of the Dow, jumped more than 25 percent following news that the U.S. government has restructured its bailout of AIG, taking a $40 billion stake in the insurer.

Also in the financial sector, Citigroup is planning to buy an unnamed U.S. regional bank after being thwarted in its pursuit of Wachovia, the Wall Street Journal reported.

And HSBC reported a profit in its latest quarter but projected a downturn for the near- and mid-term.

Indeed, the buzz is that another wave of layoffs is on the way for Wall Streetas firms budget for next year. Projections indicate that up to 70,000 jobs could be lost, the Financial Times reported.

General Motors shares got hammered after Deutsche Bank decimated its price target to zero, saying the auto maker may not be able to continue operating through December if it doesn't get government help.

In tech land, Google skidded after Microsoft announced a search partnership with Sun Microsystems . Under terms of the agreement, users of Microsoft's Internet Explorere Web browser who download Sun's Java technology platform will also be given the option to download the MSN Toolbar, giving them quicker access to Microsoft's search engine. Earlier this year, Microsoft secured a deal with Hewlett-Packard to have the MSN toolbar installed on all new HP PCs in the U.S. and Canada, starting in January.

Elsewhere, Circuit Cityfiled for bankrupcty protection a week after the No. 2 electronics retailer announced plans to close nearly 200 stores and eliminate 17 percent of its work force.

UPS and FedEx rallied following news that rival DHL would shut down its domestic-shipping operations in the U.S. and lay off nearly 10,000 employees.

This Week:

MONDAY: Bond market closes early ahead of Veterans Day; Earnings from AIG, Starbucks
TUESDAY: Government offices, bond market closed for Veterans Day; Earnings from TJX
WEDNESDAY: Weekly crude inventories; Fed's Stern speaks; Earnings from Macy's, Applied Materials
THURSDAY: Weekly mortgage applications; weekly jobless claims; international trade; Fed's Plosser, Stern speak; Treasury Budget; Earnings from Wal-Mart, Nordstrom, Kohl's
FRIDAY: Import/export prices; retail sales; business inventories; consumer sentiment; natural-gas inventories; Earnings from Abercrombie & Fitch, JCPenney

Send comments to cindy.perman@nbcuni.com.