Stocks Rocket Higher on Bank-Relief Effort

Updated from 12:12 p.m. EDT

Stocks in the U.S. rocketed higher Monday, as governments worldwide initiated massive emergency aid packages for struggling banks.

The Dow Jones Industrial Average soared 592 points to 9043, and the S&P 500 jumped 65 points to 964. The Nasdaq was better by 125 points at 1775.

During the previous week, the three major indices took a severe lashing as investors worried that stagnant credit markets weren't responding to curative efforts by the U.S. and other governments. The Dow and the S&P each dropped 18%, and the Nasdaq fell 15%.

Over the weekend, central banks across the globe were initiating policies to offer liquidity to banks and bolster lending markets.

The cost of borrowing appeared to relax slightly, as three-month dollar Libor fell 6.6 basis points to 4.75%. Overnight Libor rates were not assessed as U.S. bond markets were closed in observance of Columbus Day.

In the U.S., Interim Assistant Secretary for Financial Stability Neel Kashkari said Monday that the Treasury Department had enlisted law firm Simpson Thatcher to advise it on a plan to buy equity positions as a measure in its $700 billion relief package for financial firms.

The U.K. announced a plan to inject capital into three of its struggling banks. Royal Bank of Scotland (RBS), Lloyds (LYG) and HBOS will get up to $63 billion in government support, the U.K. government said.

The leaders of European nations announced that they would engage in a coordinated bailout package for the 15-member Eurozone, and European central banks said they would provide dollar liquidity to banks as needed. The program, with participation from France, Germany, Spain, the Netherlands and Australia, amounts to a $1.8 trillion commitment to guarantee bank loans and buy equity positions in financial firms.