US stocks shot higher today in a brisk rally after the Federal Reserve said it will buy long-term US Treasuries in its push to revive the recession-hit economy.
Shares of financial companies and home builders provided some of the biggest lifts to the market as investors bet that the Fed's move would ease lending.
Technology shares also rose sharply, aided by news of a potential takeover by IBM of Sun Microsystems.
An easing of credit market strains would help business and consumer spending. The Fed's announcement came after its policy-makers concluded a two-day meeting.
The KBW Bank index jumped 9.9 per cent and the S& P Financial index gained 8.9 per cent.
The Dow Jones home construction index climbed 11.3 percent. Shares of Pulte Homes surged nearly 11 per cent to $11.27.
"The purchases of agencies and Treasuries, while it has been talked about a long time, it certainly gives the market, especially the Treasury market, a lift here and therefore gives the stock market and the economy a lift." said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York
The Dow Jones industrial average gained 158.26 points, or 2.14 per cent, to 7,553.96. The Standard & Poor's 500 Index rose 23.94 points, or 3.08 per cent, to 802.06. The Nasdaq Composite Index jumped 44.08 points, or 3.01 per cent, to 1,506.19.
Reuters