Stocks spike on bank plan

Wall Street welcomes Obama administration plan to buy up close to $1 trillion in bad bank assets.

By Alexandra Twin, CNNMoney.com senior writer
Posted by: Liwin Troy Lee

NEW YORK (CNNMoney.com) -- Stocks continued their rally on Monday afternoon as investors hailed Treasury's plan to buy up billions in bad bank assets, seeing it as a critical move in stabilizing the financial system.

The Dow Jones industrial average (INDU) gained 315 points, or 4.3%, over 2-1/2 hours into the session. The S&P 500 (SPX) index rose 34 points, or 4.5%. The Nasdaq composite (COMP) added 61 points, or 4.2%.

"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 investors are glad to have details about the plan because previous Obama administration announcements failed to give enough specifics.

He added that 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.

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