U.S. stocks surge most in over a year on EU rescue package

09:06, May 11, 2010      

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The U.S. stocks rocketed higher on Monday, with all three major indexes surging the most in more than a year, after European leaders agreed to provide a huge rescue package of nearly 1 trillion dollars to aid the debt-laden countries, giving investors great relief.

The Dow Jones industrial average surged 454.74 points in 15 minutes of early trading and held on to most of the gains by the end of the session.

As of market close, the Dow rallied 404.71, or 3.90 percent, to 10,785.14. The Standard & Poor's 500 index soared 48.85, or 4.40 percent, to 1,159.73 and the Nasdaq jumped 109.03, or 4.81 percent, to 2,374.67.

The VIX, the benchmark for U.S. stock options, tumbled 30 percent to 28.7, the biggest drop in its two-decade history.

Monday's gains were broad-based, with all 30 Dow components ending in positive territory and 97 percent of S&P 500 stocks rising.

After long hours of discussion, finance ministers from the European Union agreed on a deal that would provide 560 billion dollars in new loans and 76 billion dollars under an existing lending program to those countries facing a financial meltdown. In addition, the International Monetary Fund was also ready to provide 321 billion dollars to help prevent the Greek debt crisis from spreading to other European countries and derailing the global economic recovery.

Meanwhile, the European Central Bank confirmed it will buy bonds in the secondary market in order to ensure market stability, a move that it denied just a few days ago. The U.S. Federal Reserve, together with other leading central banks in the world, also announced a joint intervention to make more dollars available for interbank lending.

Overseas markets, especially the European markets, were also boosted by the gigantic rescue plan. The FTSE in London soared 5.2 percent and the DAX in Frankfurt jumped 5.3 percent.



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