Stocks shot out of the gate Monday as investors cheered details of the government plan to mop up toxic assets from banks' balance sheets and after a better-than-expected housing report.
The Dow Jones Industrial Average was up nearly 300 points, or almost 4 percent in morning trading. The S&P 500 and Nasdaqwere up more than 3.5 percent.
The government is planning to loan private private firms money to buy up to $1 trillion of bad assets, then share in the profit or loss when they are sold at a later date. The plan is two-pronged: One part will focus on purchasing toxic securities, the other on purchasing bad loans.
While some say that the government's proposal would actually make things worse for the economy, futures traders greeted anticipation of the announcement with enthusiasm.
Wilbur Ross, chairman and CEO of WL Ross & Co, told CNBC's Asia Squawk Box that he thinks the key issue is due diligence, whether private investors will be allowed to conduct an in-depth study of the toxic assets.
Shares in financial companies benefited the most, with Bank of America and Citigroup each up more than 15 percent.
American Express, which had been under pressure since warning that credit card defaults were likely to rise this year, also rose sharply.
The Select Sector SPDR Financial exchange-traded fund that tracks the top companies in the sector gained more than 5 percent.
Also giving the market a boost was a better-than-expected housing report: Existing-home sales rose 5.1 percent to an annual pace of 4.72 million, blowing past the forecast for a 4.45 million rate.
Asian stocks closed strongly higher and Europe was also firmly in the green, with banks the major gainers.
Despite the fall of the US dollar after the Federal Reserve's announcement that it will boost the money supply by buying Treasurys, China is still keen to buy US government bonds, viewing the credit risk as low overall, a senior Chinese central bank official said.
"Investing in American Treasurys, as an important part of our foreign exchange reserve management, will continue," Hu Xiaolian, a vice governor of the People's Bank of China, told a news conference.
Elsewhere, General Motors shares gained even as bondholders expressed concern over delays in the company's restructuring program.
And in tech land, Intel announced it will keep base salaries and annual incentive cash baselines flat for its listed officers for 2009.
The company sees significant cost savings in 2009 from compensation program reductions, including no salary hikes, cut in contributions to retirement savings plans and employee stock purchase programa, Intel said in a filing with the SEC. Shares gained 3 percent in premarket trading.
Tiffany reported a profit of 25 cents a share in the fourth quarter and said there were no signs of an improvement in the economic conditions.
TUESDAY: Fed's Evan's speaks; Obama press conference; House hearing on AIG; Earnings from Carnival
WEDNESDAY: Weekly mortgage applications; durable-goods orders; new-home sales; weekly crude inventories; Fed's Pianalto and Yellen speak
THURSDAY: Final GDP; Weekly jobless claims; new-home sales; earnings from Best Buy, GameStop; Geithner to unveil plan for overhauling the financial system; Fed's Lockhart, Fisher, Lacker and Stern speak
FRIDAY: Personal income/spending; Consumer confidence