Stocks rocketed higher and bond prices fell Monday after investors were reassured by a nearly $1 trillion plan to avoid a European debt crisis.
The Dow Jones industrial average rose about 390 points. The Dow and broader stock indexes rose more than 3 percent. Markets also barreled higher in Europe.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.55 percent from 3.43 percent late Friday. Its price fell by about a point, or $1, as demand for safe investments eased.
"The market is breathing a huge sigh of relief that the EU has taken aggressive steps to contain the EU crisis in the weaker states," said Alan Gayle, senior investment strategist at RidgeWorth Investments.
The 16 countries that use the euro and the International Monetary Fund have agreed to create a nearly $1 trillion rescue fund to support European nations burdened by heavy debt. Markets around the world plummeted last week as fears escalated that Greece's debt problems would spread throughout Europe and upend a global economic recovery.
The U.S. Federal Reserve said it would also provide loans overseas.
Investors also feared that if Greece didn't get a bailout, the fate of the euro, which is used by 16 countries, could be in trouble. The euro rose Monday against the dollar.
"Europe has unequivocally said, 'We will defend the euro's integrity,'" said Oliver Pursche, executive vice president at Gary Goldberg Financial Services in Suffern, N.Y.
The U.S. Federal Reserve and other central banks also stepped up with financial support to help head off what some analysts believe could have been a broader financial crisis.
The Fed reopened a program launched in 2008 during the credit crisis under which dollars are shipped overseas through the foreign central banks. Those central banks can then lend the dollars out to banks in their home countries.
Aside from the Fed, other central banks, including the Bank of Canada, the Bank of England, the European Central Bank, the Swiss National Bank and the Bank of Japan are also involved in the dollar swap effort.
In late morning trading, the Dow rose 391.41, or 3.8 percent, to 10,771.84. The Standard & Poor's 500 index rose 45.08, or 4.1 percent, to 1,145.96. The Nasdaq composite index rose 95.71, or 4.2 percent, to 2,361.35.
Stocks were highly volatile at the end of last week as investors shrugged off signs of an improving U.S. economy and focused on Europe's sovereign debt problems. The Dow fell 5.7 percent last week to erase its gains for the year, while broader indexes fell even further. On Thursday alone, the Dow was down nearly 1,000 points late in the day before recovering much of its losses.
Stocks have dropped four straight days as triple-digit Dow moves have again become the norm. Big swings were also common as the credit crisis grew in late 2008 and the market bottomed in early 2009. In recent months, however, the Dow had been climbing slowly and steadily on repeated signs the economy was recovering.
Pursche said investors should expect more swings in the market. He said that the lack of turbulence in recent months was abnormal and that problems remain. Some European countries still need to enact austerity measures and unemployment remains high in the U.S., Pursche said.
"A 1 percent to 2 percent market move ... in either direction is something investors should be prepared to cope with," Pursche said.
As investors jump back into riskier assets like stocks on Monday, U.S. bond prices tumbled. Gold also fell. Both surged late last week as investors piled into safe assets.
Gold fell $10.10 to $1,200.30 an ounce. Crude oil rose $1.63 to $76.74 per barrel on the New York Mercantile Exchange.
At the New York Stock Exchange, 2,993 shares rose while only 111 fell. Trading volume came to 667 million shares compared with 892 million traded at the same point Friday.
Britain's FTSE 100 rose 4 percent, Germany's DAX index surged 4.7 percent, and France's CAC-40 rallied 8.3 percent. Japan's Nikkei stock average rose 1.6 percent.