Stocks rallied at the opening bell Monday following a series of measures and cash injections by governments and central banks designed to prop up the banking sector and avoid a global meltdown.
The Dow Jones Industrial Averagewas up about 400 points, or 5 percent, within the first few minutes of trading. (Track the Dow 30 stocks.)
The S&P 500and Nasdaqwere also up about 5 percent.
Asian stocks closed higher while in Europe markets rallied, led by bank and energy stocks.
"The global markets are giving a nod of approval to what the governments, central banks and the U.S. Treasury are doing to boost confidence in the market place," Peter Cardillo, chief market economist at Avalon Partners, told Reuters.
"What we could see is a market that begins to stabilize," Cardillo said. "Obviously there's some questions about the plans. Are we going too far? Are we all becoming socialist? But the bottom line: the market needed to get some concrete plan and I think finally we've gotten something that's going to restore confidence."
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 the blue-chip index's history.
Trading was expected to be light today as the bond market was closed for the Columbus Day holiday.
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.
Major central banks pledged Monday to pour unlimited amounts of dollars to unblock frozen credit markets at fixed interest rates auctions.
Meanwhile, Britain spent 37 billion pounds ($64 billion) to bail out three major banks, Royal Bank of Scotland, HBOS and Lloyds, and the state could become the main shareholder in two of them.
Royal Bank of Scotland will boost its capital by 20 billion pounds, with the government taking 5 billion pounds in preference shares and a share issue of 15 billion pounds underwritten by the government. Lloyds and HBOS will also be part of the plan once they merge successfully, the UK Treasury said.
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 Ul.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 about $3 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.
As U.S. auto makers rev their engines to try to jump-start lagging auto sales, General Motors is apparently fishing around for a merger partner. GM approached Ford about a possible merger in July but Ford rejected the idea and ended the discussions last month, the New York Times reported.
GM then turned its attention to Chrysler and has been in preliminary merger talks with Chrysler's owner, the private-equity firm Cerberus Capital Management.
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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