Stocks rocketed to their biggest gain in a year and bond prices fell Monday after a nearly $1 trillion plan to contain Europe's debt crisis reassured investors.
The Dow Jones industrial average rose about 405 points, or 4 percent, to close at 10,785 in its biggest advance since March 2009. Broader U.S. indexes outpaced the Dow's 3.9 percent rise. Gains in several European markets topped 9 percent.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.55 percent from 3.43 percent late Friday. The drop in demand for safety holdings like Treasuries signaled that investors are less afraid that Europe's debt problems will spoil a global recovery.
The European Union and the International Monetary Fund agreed to create a nearly $1 trillion rescue fund to support European nations burdened by heavy debt. The scope of the plan was greater than many analysts had expected and eased fears that leaders wouldn't be able to suppress the crisis.
"The market is breathing a huge sigh of relief that the EU has taken aggressive steps," said Alan Gayle, senior investment strategist at RidgeWorth Investments in Richmond, Va.
Investors drew reassurance after the Federal Reserve and other central banks stepped up with financial support to corral what analysts warned was a growing financial crisis.
The Fed restarted a program from 2008 to ship dollars overseas through the foreign central banks. Those central banks can then lend the dollars out to banks in their home countries. The Bank of England, the European Central Bank, the Bank of Canada, the Swiss National Bank and the Bank of Japan are also involved in the dollar-swap effort.
The advance in U.S. stocks was broad. Bank of America Corp., Caterpillar Inc. and General Electric Co. led the Dow with gains of more than 6 percent.
Markets around the world plummeted last week after fears grew that Greece's debt problems would spread to other struggling European economies like Spain, Portugal and Italy. The Dow slid 5.7 percent last week in its worst drop since the depths of the financial crisis in October 2008.
According to preliminary calculations, the Dow rose 404.71, or 3.9 percent, to 10,785.14. At its peak, the Dow was up nearly 455 points. The climb was the biggest since March 2009, when the market was bouncing off its lowest levels in 12 years.
The Standard & Poor's 500 index rose 48.85, or 4.4 percent, to 1,159.73. The Nasdaq composite index rose 109.03, or 4.8 percent, to 2,374.67.
© Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.