Reversing course on last week's historic losses, the Dow posted its best one-day point gain ever Monday as the gloom and doom on Wall Street vanished -- at least temporarily -- amid the latest global rescue efforts.
Today's Market
The Dow Jones Industrial Average jumped 936.42 points, or 11.08%, to 9387.61, the broader S&P 500 soared 104.13 points, or 11.58%, to 1003.35 and the Nasdaq Composite surged 194.74 points, or 11.81%, to 1844.25. The consumer-friendly FOX 50 gained 76.04 points, or 11.23%, to 753.01.
Monday's rally marked the first positive close on Wall Street since September 30 and raised hopes that the worst of the most serious financial crisis since the Great Depression could soon be over.
“It's unbelievable. We’ve definitely taken some nervousness out of the market," said Anthony Conroy, head trader at BNY ConvergEx. "I think we're in the bottoming process...I do think the worst is over."
That bullish sentiment was backed up by the fact the markets closed at their highest levels of the day, reversing a weeks-long trend of catastrophic late-day selloffs. In fact, the Dow surged by more than 300 points in the final hour alone.
The Dow rally was the index's largest point gain ever, nearly doubling the previous record of 499 points set in March 2000. On a percentage basis, the gains were even more impressive as the Dow had its best day since September 1932.
"We are way oversold. We should see a rally over the next two or three days," Dave Rovelli, managing director of equity trading at Canaccord Adams, told FOXBusiness ahead of the opening bell on Monday.
U.S. markets followed in the footsteps of global indexes, which saw enormous gains. London's FTSE 100 rose 8.3%, while Paris's CAC and Germany's DAXeach closed 11% higher.Hong Kong's Hang Seng Index surged 10% overnight.
In addition to the global developments on the credit crisis, Morgan Stanley (MS) surged more than 85% after solidifying a $9 billion investment, General Motors (GM) and Ford(F) saw huge gains on merger reports and crude oil prices rebounded from 13-month lows to close above $80 a barrel.
The credit crisis reached new heights last week, sending the Dow to its worst weekly losses ever. The benchmark U.S. index plummeted 18%, briefly diving below the 8000 level.
"I don’t think we’re going much lower. I’m not saying we’ll go a great deal higher. But I think we’ve clearly seen a bottom," NYSE trader Jason Weisberg of Seaport Securities told FOXBusiness.
Aluminum titan Alcoa (AA) and General Motors led the way up on the Dow Monday, jumping by double-digit percentages. United Technologies (UTX) and Microsoft (MSFT) also saw enormous gains on the Dow. GeneralElectric (GE) closed down 2%, making the corporate conglomerate the lone blue-chip stock to close in the red on Monday.
The Nasdaq Composite saw even greater gains, ending the day with its second-best percentage gain ever and largest point jump since the bursting of the tech bubble. Virgin Media (VMED) and Baidu.com (BIDU) were two of the Nasdaq 100's biggest percentage winners on Monday. Big-name tech stocks like Microsoft (MSFT), Google (GOOG) and Apple (AAPL) also saw double-digit percentage gains.
Rescue Calls Answered
Europe saw the most significant developments over the weekend: there are plans for government-backed bank borrowing; plans to inject billion of dollars of new liquidity into banks; and a $63 billion rescue in the U.K. for Royal Bank of Scotland (RBS) and newly merged Lloyds TSB and HBOS.
Late Friday Treasury Secretary Henry Paulson said the U.S. will buy equity stakes in banks for the first time since the Great Depression. The stakes will be made in nonvoting shares and will complement private investments, according to Paulson.
Also, the Federal Reserve said Monday it will begin providing unlimited dollar funding to central banks through its currency swap agreements, enhancing another of its liquidity tools.
Given the leaps made by European governments over the weekend, the U.S. is expected to announce additional coordinated measures in the next 24-48 hours to address credit problems, sources told FOXBusiness's Peter Barnes.
Huge Rebounds for Morgan, GM
The financial sector was boosted by the closing of a $9 billion investment by Mitsubishi UFJ to MorganStanley (MS). The terms of the transaction were altered given Morgan's 60% plunge last week. The news sent shares of Morgan surging by more than 90%.
The auto sector rebounded from a nasty week after reports swirled of merger talks between Detroit's BigThree. GeneralMotors (GM) has been in talks to acquire privately-held Chrysler LLC after failing to come to terms with Ford (F), published reports revealed.
Crude Joins the Rally
Meanwhile, crude oil futures gained steam Monday after plummeting 17% last week -- their worst weekly percentage drop since March 2003. Oil closed up $3.49 to $81.19 a barrel.Energy stocks responded to Monday's oil-price rebound in a big way, surging 16% as a sector.Oil giants Chevron (CVX) and ExxonMobil (XOM) saw even larger gains.
Crude has been under enormous pressure on fears the credit crisis will spark a global recession, lowering demand for energy.The plunge in oil prices finally gave consumers a break on average gasoline prices, which plummeted 35 cents over the prior two weeks, the largest drop ever, according to the LundbergSurvey.
Due to the Columbus Day holiday, bond markets were closed on Monday.
Corporate Movers
Wells Fargo's (WFC) $11.7 billion takeover of Wachovia (WB) received a green light from the Federal Reserve over the weekend, sending Wachovia's shares higher.
United Technologies (UTX) withdrew its $2.64 billion deal for ATM maker Diebold (DBD). The $40-a-share buyout offer, which was unveiled in February, was repeatedly rejected by Diebold management as being too low.
Sovereign Bancorp (SOV) saw its shares fall after Spain's Banco Santander (STD) confirmed earlier buyout reports. Santander, which has a 25% stake in Sovereign, is considering buying the remaining shares at Sovereign's current price, The Wall Street Journal reported.
New York &Co. (NWY) lost more than one-third of its market cap after the retailer warned it sees a third-quarter loss in the range of 8 cents to 12 cents per share. Analysts had expected a profit of 11 cents per share, according to ThomsonReuters.
Abbott Labs (ABT) unveiled a plan to repurchase $5 billion of its own stock after seeing its shares plunge to levels unseen in nearly two years.
