US stocks surged today as the Dow and the S&P 500 posted their best one-day advance in nearly five months following the Obama administration's unveiling of a plan to purge toxic assets from bank balance sheets.
The Dow Jones industrial average gained 497.48 points, or 6.84 per cent, to 7,775.86, while the S&P's 500 Index rallied 54.37 points, or 7.07 per cent, to 822.91. The Nasdaq Composite Index surged 98.50 points, or 6.76 per cent, to 1,555.77.
A report showing a rebound in existing-home sales in February added to the positive tone.
Bank shares led the way up during the day, buoyed by the latest plan, which is geared at unlocking tight credit markets with help from private investors. Citigroup jumped 14.5 per cent to $3.00 and Bank of America rose 13.6 per cent to $7.03, while the KBW Bank Index climbed 7.6 per cent.
The Treasury Department will kick off the financing for the so-called Public-Private Investment Program with $75-$100 billion out of the $700 billion financial bailout fund approved by Congress last fall.
Treasury secretary Timothy Geithner gave a broad outline of the plan last month, but investors panned it as being light on details and stock markets fell to 12-year lows.
However, stocks have rallied off those lows in recent weeks, spurred by the government's aggressive moves to shore up the economy as well as positive comments from some major banks about their performance outlooks.
Adding to the positive tone, data showed the pace of existing home sales rose 5.1 per cent in February, the biggest increase since July 2003. The Dow Jones index of home builders was up 4.6 per cent shortly after the data was released.
A large merger deal in the energy sector and rising oil prices helped buoy shares of oil companies with Exxon Mobil up 2.2 per cent at $67.51, and Chevron gaining 3.1 pe cent to $66.71.
Canada's No. 2 oil company Suncor Energy agreed to buy rival Petro-Canada for about $14.9 billion to create Canada's largest oil company. . Meanwhile, U.S. crude futures rose $1 to $53.07 a barrel, helped by the bank plan details.
Upscale jeweler Tiffany jumped 8.5 percent to $21.95 after reporting quarterly profit that beat expectations. But Tiffany gave a disappointing earnings forecast for the year, saying it has not seen signs of a turnaround yet.
Also on the earnings front, shares of Walgreen rose 9.3 per cent to $26.55 after the drugstore chain posted better-than-expected profit, helped by restructuring efforts.
Reuters