U.S. stocks rallied, with the Standard & Poor’s 500 Index gaining the most intraday since April 2009, after European policy makers unveiled loan package valued at almost $1 trillion to contain a sovereign-debt crisis.

Citigroup Inc., Bank of America Corp. and Morgan Stanley jumped more than 4 percent. Schlumberger Ltd. and Chevron Corp. followed oil prices higher, while Alcoa Inc., the largest U.S. aluminum producer, rallied with metal prices.

The S&P 500 jumped 4.3 percent to 1,158.79 at 9:58 a.m. The Dow Jones Industrial Average climbed 412.27 points, or 4 percent, to 10,792.7. The VIX, the benchmark index for U.S. stock options, tumbled 34 percent to 27.11, earlier dropping 37 percent for the biggest intraday drop in its two-decade history.

“The European bailout is a good place to start,” said James Dunigan, chief investment officer at PNC Wealth Management in Philadelphia, which oversees $104 billion. “The ECB didn’t have much choice and is doing the right thing. The selloff from last week is overdone.”

U.S. stocks fell the most in 14 months last week, erasing their 2010 advance, as concern about Greece’s finances and a breakdown in U.S. market systems spurred the most volatile trading in a quarter century.

S&P 500 futures earlier rallied as much as 55 points, the overnight limit set by the CME Group Inc., the world’s largest futures and options exchange. At the beginning of each quarter, the CME sets new maximum amounts by which stock-index futures are allowed to rise or fall. Dow futures jumped as much as 421 points, less than their second-quarter limit of 550 points.

Smoothing the Open

    The New York Stock Exchange and NYSE Amex cash platforms invoked Rule 48 today, which is designed to smooth the opening of stocks when futures and overseas markets suggest high levels of price volatility. The regulation is used “only in those situations where the potential for extremely high market-wide volatility would likely impair floor-wide operations at the exchange,” NYSE Euronext said in an e-mail today.

Today’s gain was the fourth-biggest rally in futures since 1993, according to Birinyi Associates Inc. The Dow has advanced an average of 4.6 percent during the regular trading session following the 10 biggest gains in futures since 1993, according to Birinyi.

Jolted into action by last week’s slide in the euro to a 14-month low and soaring bond yields in Portugal and Spain, the 16 euro nations agreed to offer financial assistance worth as much as 750 billion euros ($970 billion) to countries under attack from speculators. The European Central Bank will counter “severe tensions” in “certain” markets by purchasing government and private debt.

‘Convincing’ Rescue Package

“Investors are rightly relieved,” said Jacques Porta, a fund manager at Ofi Patrimoine in Paris, which oversees about $425 million in stocks. “Investors find this rescue package a lot more convincing as it is a lot more precise and as it really is a global plan.”

Stocks around the world have been battered this month amid concern European leaders won’t do enough to keep indebted nations from defaulting. Under the unprecedented loan package, euro-area governments pledged 440 billion euros in loans or guarantees, with 60 billion euros more in loans from the European Union’s budget and as much as 250 billion euros from the International Monetary Fund. The European Central Bank said it will conduct “interventions” to ensure “depth and liquidity” in markets.

Deficit Reductions

“In the short-term, it may be viewed as a positive and we may recover some of the losses we had in equities last week,” Oscar Pulido, a portfolio specialist at BlackRock Inc., told reporters in Seoul today. “In the longer-term, it’s going to be very much dependent on whether governments in these countries can truly take the measures to reduce the deficits they’ve accumulated.” BlackRock managed $3.36 trillion in assets as of March 31, according to its Web site.

Waves of electronic selling helped push the Dow Jones Industrial Average down as much as 9.2 percent on May 6, the biggest drop since the crash of 1987, before paring losses. The VIX, the benchmark index for U.S. stock options, surged 86 percent to 40.95 for the biggest weekly gain in its history.

The MSCI Asia Pacific Index rose for the first time in six days today, adding 1.6 percent to 120.35, while the Stoxx Europe 600 Index surged 6.5 percent to 252.59, the biggest rally since December 2008. European stocks had plunged the most in 18 months last week.

Treasuries tumbled on investors’ increased appetite for risk, with yields on benchmark 10-year U.S. notes rising to 3.57 percent from 3.43 percent at last week’s close. German bunds opened lower, sending 10-year yields up 18 basis points.

Greek Yield

Citigroup increased 7 percent to $4.28, while Bank of America climbed 6.5 percent to $17.24. European banks led gains in the Stoxx 600 today, rising the most since September 2008.

Morgan Stanley, the sixth-largest U.S. bank by assets, rose 4.6 percent to $29.03. The bank made more than $120 million in trading revenue on seven separate days in the first quarter, or 11 percent of the time, according to a May 7 filing with the U.S. Securities and Exchange Commission.

Schlumberger, the world’s largest oilfield contractor, rose 5.4 percent to $66.24, while Chevron gained 4.3 percent to $80.38.

Crude oil surged 3.2 percent to $77.51 a barrel in New York and rose as much as 4.5 percent to $78.51 a barrel in electronic trading on the New York Mercantile Exchange. That’s the biggest intraday surge since Sept. 30.

Alcoa, the largest U.S. aluminum producer, jumped 4.8 percent to $12.57. Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, rose 7.1 percent to $72.36. Aluminum, copper, lead, nickel, tin and zinc all rose on the London Metal Exchange today.

Boeing Co., the world’s second-largest commercial-plane maker, rose 6.1 percent to $70.81 after Goldman Sachs Group Inc. raised the shares to “conviction buy” from “neutral.”

Altria Group Inc. rallied 3.1 percent to $21.40. The largest U.S. tobacco company topped Barron’s 500 list of the best public companies in the U.S. and Canada as measured by sales.

By Rita Nazareth

Tags: bank, Dow Jones Industrial, economy, european central bank, european union, financial, financial markets, Global Economy, IMF, investors, stock market, us stocks

This entry was posted on Monday, May 10th, 2010 at 11:02 am and is filed under Dow Jones Industrial, Global Economy, Global Financial, Market Finance, US Finance, US Inflation, World Financial, european economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.