NEW YORK – Wall Street rose in early trading Monday, boosted by China's $586 billion stimulus package, a move that investors believe will help ease the global economic downturn.
The advance follows a rally in Asia and Europe after China announced plans to boost its economy through a mix of spending, subsidies, looser credit policies and tax cuts. The package was seen as a benefit to multinational companies such as General Electric Co. and Caterpillar Inc.
Also boosting U.S. markets, the government on Monday provided new financial assistance to troubled insurance giant American International Group Inc., including pouring $40 billion into the company in return for partial ownership. The action was announced jointly by the Federal Reserve and the Treasury Department.
All told, the moves, on top of the bailout of AIG announced in September, boost aid to the company to around $150 billion. The insurer, whose shares surged 26 percent to $2.65, also announced a $24.47 billion loss for the third quarter.
The Dow Jones industrial average rose 141.38, or 1.58 percent, to 9,085.19.
Broader indexes also surged. The Standard & Poor's 500 index jumped 12.78, or 1.37 percent, to 943.77; and the Nasdaq composite index rose 15.61, or 0.95 percent, to 1,663.01.
Last week, the major indexes each lost about 4 percent. Trading this week is expected to remain volatile, but analysts have predicted the market will remain turbulent as it tries to recover from October's devastating losses.
With stocks higher, investors moved out of the relative safety of government bonds. The three-month Treasury bill's yield rose to 0.32 percent from 0.28 percent late Friday. A higher yield indicates less demand. The yield on the benchmark 10-year Treasury note rose to 3.81 percent from 3.79 percent late Friday.
Oil prices jumped above $63 a barrel Monday in Asia as regional stock markets rallied on China's economic stimulus plan, which could underpin demand for crude. A barrel of light sweet crude rose $3.10 to $64.14 on the New York Mercantile Exchange.
With no major economic data due during the session, Wall Street turns to corporate news for direction. Investors later this week will pore over a stream of reports, including retail sales, the labor market and consumer sentiment.
Investors are watching for developments with General Motors Corp., Chrysler and Ford Motor Co. after the automakers met with congressional leaders last week in hopes of securing financial help. GM fell 75 cents, or 17.2 percent, to $3.61, while Ford shed 2 cents to $2.00.
Democratic leaders in Congress asked the Bush administration on Saturday to provide more aid to the struggling auto industry, which is losing money and jobs as sales have dropped to their lowest level in a quarter century. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in a letter to Treasury Secretary Henry Paulson that the administration should consider expanding the $700 billion bailout program to include car companies.
Citigroup Inc. is in talks to acquire a regional bank to boost the bank's presence in areas it already operates, including the Northeast, California and Texas, according to a report in The Wall Street Journal. The report, which did not name a potential target, said that Chief Executive Vikram Pandit is attempting to broaden the bank's deposit base.
Shares of the bank rose 28 cents, or 2.4 percent, to $12.10.
Power generator NRG Energy Inc. on Sunday rejected an unsolicited $6.1 billion all-stock bid from nuclear power giant and utility operator Exelon Corp., calling the offer too low. The deal would create the nation's largest power company.
Shares of NRG fell 54, 2.3 percent, $23.32. Exelon rose 40 cents to $54.32.
The Russell 2000 index of smaller companies rose 4.58, or 0.91 percent, to 510.37.
Overseas, Japan's Nikkei stock average closed up 5.81 percent, and Hong Kong's Hang Seng index added 3.52 percent. In Europe, the Britain's FTSE 100 rose 2.04 percent, Germany's DAX added 2.55 percent, and France's CAC-40 rose 2.14 percent.