Stocks closed sharply higher for a fourth-consecutive session Thursday following news that major central banks across the world agreed to lend U.S. dollars to European banks, taking pressure off funding issues across European banks.
The Dow Jones Industrial Average surged 186.45 points, or 1.66 percent, to finish at 11,433.18, with all 30 blue-chip stocks posting a gain.
BofA and JPMorgan were the biggest gainers.
The S&P 500 rallied 20.43 points, or 1.72 percent, to close at 1,209.11. The Nasdaq jumped 34.52 points, or 1.34 percent, to end at 2,607.07, logging its highest close in six weeks.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 32.
All 10 S&P sectors were higher, led by financials and energy.
“Everyone loves to see this kind of buoyancy in the market after what we’ve been through recently and there is technical reasons for it,” Peter Kenny, managing director at Knight Equities told CNBC. “I suspect we do have further room here—we could see another 4 or 5 percent on the Dow, but we’re going to run into some headwinds because those broader stories are going to continue to dominate the bigger picture.”
Markets rallied after European Central Bank said it would reintroduce three-month dollar liquidity operations in the fourth quarter, alongside other major central banks. The ECB said it would hold three separate operations between October and December, adding it would help see banks through the year-end period.
The central bank loans will alleviate pressure from financials, which have been under pressure recently amid worries that they were having difficulties getting short-term loans from each other.