After four consecutive weeks of losses amid concern that the U.S. stock markets had risen too high given the uncertain economic backdrop, stocks powered ahead on Monday - rising the most since June 1.
The Dow Jones industrial average closed at 8,331.68, up 185.16 points or 2.3 per cent. The broader S&P 500 closed at 901.05, up 21.92 points or 2.5 per cent.
Financials enjoyed by far the biggest gains of the day, rising 6.5 per cent as investors welcomed analyst Meredith Whitney's "buy" recommendation on Goldman Sachs Group Inc. It marked the sharpest rally among financials since May 18 and arrives on the same week that a number of big names in the sector are expected to report their second quarter results.
Among some of the standout moves: American International Group Inc. rose 24.1 per cent, Fifth Third Bancorp rose 9.5 per cent, Bank of America Corp. rose 9.3 per cent and Goldman Sachs rose 5.3 per cent. (Oops, Ms. Whitney's best hope was a laggard, but we digress.)
What's interesting is that the day's gains among financial stocks happened when another company in the group - CIT Group Inc. - teetered on the edge of insolvency. That would have been enough to freak out the stock market in more troubled times, but was simply shrugged off by investors as an isolated problem on Monday.
In Canada, the S&P/TSX composite index closed at 9,891.93, up 144.80 points or 1.5 per cent. The index fell at the start of trading on Monday, due to sagging commodity producers, but rebounded nearly 300 points from its low point as commodity producers found some strength.
Suncor Energy Inc. rose 0.6 per cent and Talisman Energy Inc. rose 2.9 per cent after the price of crude oil regained some of its earlier losses, closing at $59.69 (U.S.) a barrel, down just 20 cents.
Although Potash Corp. of Saskatchewan Inc. fell 1.1. per cent - continuing Friday's selloff - it recovered considerably during the day after investors ditched the stock earlier on concerns about declining fertilizer prices.
But financials were the stars of the day, tracking their U.S. counterparts higher. Manulife Financial Corp. rose 4.2 per cent and Toronto-Dominion Bank rose 2.2 per cent.
David Berman