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.
