(Financial market article 1)
Posted by: Liwin Troy LeeBy Alexandra Twin, CNNMoney.com senior writer
Wall Street posts its best day since November as investors welcome Obama administration plan to buy close to $1 trillion in bad bank assets.
NEW YORK (CNNMoney.com) -- Stocks surged Monday, recharging the rally, after Treasury's plan to buy up billions in bad bank assets and a better-than-expected existing home sales report raised hopes that the economy is stabilizing.
The Dow Jones industrial average (INDU) gained 497 points, or 6.8%, according to early tallies, posting its biggest one-day point gain since Nov. 21. The S&P 500 (SPX) index rose 54 points, or 7.1%. The Nasdaq composite (COMP) added 99 points, or 6.8%.
"I think the stock reaction is a vote of confidence in the plan," said Jack Ablin, chief investment officer at Harris Private Bank.
He said the stock market is also reacting well because the plan is skewed in favor of the private investor, who only has to be responsible for around 7% of the total in any transaction.
But other analysts were less sanguine. "The plan is a rehash of what we've seen before and it still doesn't resolve the issue of how to value the bad assets," said Stephen Leeb, president at Leeb Capital Management.
"There's a lot of cash on the sidelines, there's a real wish to believe that this is a solution and there has been some good news on the economy lately," he said. "All of that is contributing to a rally as well."
Stocks have gained for the past two weeks, despite tumbling last Thursday and Friday. But that retreat gave investors an opportunity to jump back in Monday, with bank shares leading the advance.
Since tumbling to 12-year lows two weeks ago, the S&P 500 has now rallied 18% as of Monday afternoon. But even with the enthusiasm Monday, the S&P 500 was struggling to hold above 800, a key resistance level that analysts say it will need to surpass if the market is going to be able to make a sustained move higher.
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