Stocks closed near session highs in volatile trading Monday, led by financials and energy, amid hopes for coordinated action from euro zone policymakers to contain the region's debt crisis.
The Dow Jones Industrial Average soared 272.38 points, or 2.53 percent, to finish at 11,043.86, rallying above the psychologically-important 11,000 level. BofA and JPMorgan led the blue-chip gainers.
The S&P 500 jumped 26.52 points, or 2.33 percent, to close at 1,162.95. The Dow and S&P 500 posted their best gains in almost 3 weeks.
The tech-heavy Nasdaq rebounded 33.46 points, or 1.35 percent, to end at 2,516.69 after starting the session in the negative territory.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, slipped below 40.
All 10 S&P sectors gained, led by financials and energy.
Stocks advanced following news that a detailed plan to leverage money in the EFSF is in the works, according to a European official. The plan would use a portion of the money from the fund to shore up European bank capital, while another portion would be used as seed money for a European Investment Bank, according to the official.
“Right now, we have stability in the markets, but it’s not equilibrium and that’s where we’re losing traction in the stock market…it’s not sustainable for the long-term,” said Brian Battle, vice president of trading at Performance Trust Capital Partners.
“We have a lot of headlines this week but the two big things we’re watching is Germany’s vote on EFSF on Thursday and Congress as it is back in session,” added Battle.
European shares closed higherfollowing news that monetary policy officials in Europe have already started discussing the next steps they will take to ease the euro zone sovereign debt crisis, as policymakers work to finalize the EFSF.
Bank shares rallied amid hopes of a euro zone deal. Citigroup and JPMorgan climbed almost 6 percent each.
Regional banks were trading higher as well. First Horizon National jumped after Morgan Stanley raised its rating on the bank to "overweight" from "equalweight."
UBS also gained as the bank introduced a new CEOafter Oswald Gruebel resigned in the wake of a $2.3 billion rogue trading scandal.