Wall St. roars over slight credit thaw, US stimulus hopes

NEW YORK (AFP) – US stocks roared higher Monday on signs that governments' massive actions to get credit flowing again were beginning to work and growing momentum behind a second US economic stimulus package.

The Dow Jones Industrial Average skyrocketed 413.21 points (4.67 percent) to close at 9,265.43 and the tech-heavy Nasdaq composite leapt 58.74 points (3.43 percent) to 1,770.03.

The broad Standard & Poor's 500 index advanced 44.85 points (4.77 percent) to 985.40.

"A mood shift may be underway on Wall Street. Talk of a second stimulus plan and signs the credit crunch is easing combined to create a powerful rally today," said Al Goldman, chief market strategist at Wachovia Securities.

The advance picked up steam in the last hour of trade on mounting hopes for relief for strapped consumers after the White House said it was open to considering a second stimulus plan to kick-start the sluggish economy, reeling from the worst credit crisis since the 1930s Great Depression.

Federal Reserve chairman Ben Bernanke earlier endorsed the move in testimony before the House of Representatives budget committee, after warning of a possible "protracted slowdown."

"With the economy likely to be weak for several quarters and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," he told lawmakers.

Investors also found relief in a decline in interest rates that banks charge each other for three-month loans in London, although credit remains at extremely tight levels.

Analysts said trading got off to a strong start after the United States and the European Union decided over the weekend to hold a series of summits to strengthen the international financial system, with the first meeting expected next month.

Bernanke gave no firm hint of further interest rate cuts to help the economy. On October 8, the Fed slashed its interest rates by 0.50 percentage points in a coordinated move with other major central banks.

The key federal funds rate is currently pegged at 1.5 percent. The Federal Open Market Committee holds its next rate-setting meeting on October 28 and 29.

In another market positive, the Conference Board reported its composite index of leading economic indicators, covering the coming six months, edged up 0.3 percent in September, the first increase in the past five months.