Stocks End Near Session Highs, Dow Soars 300

Stocks surged in the final minutes of trading to close at session highs Monday, led by banks, amid optimism that France and Germany's pledge would help resolve the euro zone debt crisis and rescue the region's struggling financials.

The Dow Jones Industrial Average soared 330.06 points, or 2.97 percent, to end at 11,433.18, logging its best five-day point gain since Dec. 2008, led by BofA and JPMorgan . The Dow has rallied over 1,000 points from last Tuesday's intraday low of 10404.49.

The S&P 500 jumped 39.43 points, or 3.41 percent, to close at 1,194.89. The Nasdaq rallied 86.70 points, or 3.50 percent, to finish at 2,566.05. Both the S&P 500 and Nasdaq are on track for their best month this year.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished near 33.

All 10 S&P sectors finished firmly in the black, led by banks and energy.

Government offices and bond markets were closed for the Columbus Day holiday. And with no significant economic indicators or earnings reports, volume was quite light with the consolidated tape of the NYSE at 3.76 billion shares, while 888 million shares changed hands on the floor ahead of a holiday weekend.

Over the weekend, German Chancellor Angela Merkel and French President Nicolas Sarkozy promised to present a plan before a G20 summit early next month to shore up euro zone banks, settle the Greek debt crisis and help growth in Europe.

“The optimism is amazing to me—I don’t think any market participant is saying things are fixed in Europe, but what they’re hoping is that by the time Europe starts to resurface again in a few months from now, there will be traction in our economy that will be enough of a positive to wipe out the negative there,” Jim Iuorio of TJM Institutional Services told CNBC.

The optimism helped propel commodities higher—gold surged to near $1,670 an ounce, while U.S. light, sweet crude and London Brent crude both rallied more than 2 percent each. The euro jumped over 2 percentagainst the safe-haven dollar. The last time the euro move up more than 2 percent against the greenback was in July 2010.

Banks are once again in focus after the board of Franco-Belgian bank Dexia agreed to the nationalization of its Belgian banking divisionand secured state guarantees after the bank—which has been significantly exposed to Greek debt—ran into liquidity trouble. Dexia shares closed slightly lower after zig-zagging wildly.

Shares of U.S. financials rallied as France and Germany's pledge in addition to Dexia's rescue helped ease worries that lenders would be exposed to losses at their European counterparts. Morgan Stanley and Citigroup surged more than 7 percent each.

Meanwhile, the EU president said he is delaying next week's summit until Oct. 23 because leaders need more time to finalize a plan to fight a worsening debt crisis.

Investors will be looking ahead to Alcoa earnings after-the-bell Tuesday as the aluminum producer's results unofficially mark the start to third-quarter earnings season.

On the tech front, Apple jumped after the tech giant said it received orders for more than one million iPhone 4S phoneswithin the first 24 hours, beating its previous record of 600,000 for the iPhone 4. Apple unveiled the latest model a day before the death of its co-founder Steve Jobs.

Meanwhile, Sprint declined to its lowest level in 2-1/2 yearsafter several firms downgraded their rating and price target on the wireless carrier over worries on the firm's strategy and financial stability.

Netflix said it will abandon its unpopular proposal to separate its streaming and DVD businesses. However, the stock erased its earlier gains to turn negative after Wedbush downgraded its rating on the firm to "neutral" from "outperform" and cut its price target to $110 from $155.

Meanwhile, Sirius XM soared after Morgan Stanley reiterated its "overweight" rating on the satellite radio firm.

Yahoo co-founder and former CEO Jerry Yang said he is interested in a deal with private equity firms that would take search-engine company off public markets, according to Reuters.

On the M&A front, Complete Production Services skyrocketed after Superior Energy Services agreed to buy the oilfield services producer.

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On Tap This Week:

TUESDAY: NFIB small biz optimism index, 3-yr note auction, FOMC minutes, P&G shareholder mtg; Earnings from Alcoa, interim results from Chevron
WEDNESDAY: Weekly mortgage apps, 10-yr note auction, Fed's Plosser speaks, Fed's Pianalto speaks, Oracle shareholders mtg; Earnings from PepsiCo
THURSDAY: International trade, jobless claims, oil inventories, 30-yr bond auction, Fed's Kocherlakota speaks; Earnings from JPMorgan, Google
FRIDAY: Retail sales, import/export sales, consumer sentiment, business inventories, new iPhones available; Earnings from Mattel

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