Traders erupted into cheers on the floor of the New York Stock Exchange as the Dow Jones Industrial Average jumped 617 points from its low of the day. The Standard & Poor's 500 Index climbed 4.3 percent as 68 companies in the gauge rose more than 10 percent.
Wachovia Corp. soared 59 percent, Citigroup Inc. added 19 percent and Bank of America Corp. jumped 12 percent, sending the KBW Bank Index to its biggest gain since July. Morgan Stanley erased a 46 percent tumble and Goldman Sachs Group Inc. recovered most of a 25 percent slide as Senator Charles Schumer proposed a new agency to pump capital into financial companies and the nation's three largest pension funds stopped loaning shares of the brokerages to investors betting on their declines.
The S&P 500 advanced 49.94 points to 1,206.33, recovering most of yesterday's 4.7 percent tumble. The Dow surged 410.03, or 3.9 percent, to 11,019.69. The Nasdaq Composite Index jumped 100.25, or 4.8 percent, to 2,199.1. Seven stocks advanced for each that fell on the NYSE.
The S&P 500, which fell 4.7 percent twice this week, rebounded from its lowest level since May 2005. Stocks opened higher after the Federal Reserve said it authorized global central banks to auction funds ``to address the continued elevated pressures in U.S. dollar short-term funding markets.''
The benchmark index for U.S. equities then swung between gains and losses as concern over the health of Morgan Stanley and Goldman Sachs Group Inc. dragged on financial shares, before stocks rallied in the last hour of trading after Schumer proposed the new agency.
About $3.6 trillion of market value was erased from global stocks this week before today, triggered by the bankruptcy filing by Lehman Brothers Holdings Inc., once the fourth-largest U.S. securities firm.