Stocks close up sharply as optimism grows
The Dow Jones industrial average ended Monday up 330.06 points, or 3%, to 11,433.18. The broader Standard & Poor's 500 index jumped 3.4%, or 39.43 points, to 1,194.89.
Over the weekend, French President Nicolas Sarkozy and German Chancellor Angela Merkel announced in Berlin that they would come up with a plan to help stabilize and recapitalize struggling European banks. They gave few specifics but said a definite plan would be ready by a Nov. 3 meeting of the Group of 20.
In another sign of the willingness of European governments to act, the French and Belgian governments stepped in over the weekend to carry out an orderly breakup of Dexia, one of the banks that has encountered the most problems.
Leading indexes closed up 3% in Germany and 2.1% in France.
Last week, the S&P 500 rose on three consecutive days after almost falling into bear-market territory, 20% down from highs reached in spring. The market's latest gains have been helped by a series of U.S. economic indicators that have suggested that the economy is in better shape than many analysts expected.
Bank shares, which have been leading stocks down in recent weeks, helped lead the charge up Monday. One of the most beleaguered bank stocks, Morgan Stanley, ended the day up 5.1%.
Stocks rose sharply in the morning and, after trading in a narrow range all day, surged again near the close.
Trading volume was modest, however, with banks closed for the Columbus Day holiday.
The market's next big test: earnings reports. The season kicks off Tuesday with a report from aluminum giant Alcoa Inc.
-- Nathaniel Popper in New York
Photo: Traders work on the floor of the New York Stock Exchange. Credit: Spencer Platt / Getty Images