No one is certain whether Europe's plan to solve its debt crisis will work, but investors on Monday were in no mood to wait for a consensus opinion. With nearly a trillion dollars (U.S.) being thrown at the crisis, U.S. stocks enjoyed their biggest bounce in more than a year.
The Dow Jones industrial average closed at 10,785.14, up 404.71 points or 3.9 per cent. The broader S&P 500 closed at 1,159.73, up 48.85 points or 4.4 per cent. The only bigger gain for either index occurred at the start of the bull market, in March 2009. In Canada, the S&P/TSX composite index closed at 11,947.90, up 255.47 points or 2.2 per cent - marking the biggest one-day move since December.
The gains come as a big source of relief to investors who had watched stocks slide through most of last week, amid a stock market glitch but also fundamental concerns that the Greek debt crisis would spill into other European nations and affect the global economy.
Now, with the European Union and the International Monetary Fund - with assists from the European Central Bank and the U.S. Federal Reserve - agreeing to a bailout package worth 750-billion euros, the takeaway is that something serious is being done.
North American stock market gains were remarkably widespread, with 98 per cent of stocks in the S&P 500 ending the day higher. However, there was a clear theme here: Investors reaffirmed their love of risk, sending more cyclical stocks higher than their defensive counterparts.
In the United States, industrials, financials, consumer discretionary stocks and information technology led the gains, rising 5 per cent or more.
In Canada, the breakdown was similar - though the gains not as impressive - with industrials, energy stocks, financials and consumer discretionary stocks rise 2 per cent or more.
Meanwhile, the love of risk showed itself in other ways as well. The Canadian dollar surged almost 2 cents (U.S.) against the U.S. dollar, and the Reuters/Jefferies CRB index of 19 commodities jumped 1.6 per cent. Crude oil, which fell sharply last week, rebounded nearly $2 a barrel, taking it close to $77.