Epic Win for Bulls; Dow Soars 889 Points

Updated from 4:10 p.m. EDT

Stocks in New York thundered higher in the final hour of trading Tuesday to close the day with remarkable gains.

The Dow Jones Industrial Average surged 889.35 points, or 10.9%, to 9065.12, and the S&P 500 added 91.59 points, or 10.8%, to 940.51. The Nasdaq jumped 143.57 points, or 9.5%, to 1649.47.

The Dow's rise marks the second biggest single-day point gain in the history of the index. (On Oct. 13, it gained 936.42 points.)

"You got a good day, a good advance, good volume," said Paul Nolte, director of investing at Hinsdale Associates. "I don't know if we've stemmed the tide or not; that's going to require an actual back-to-back gain." Nolte said he will remain cautious until a rally lasts longer than one day.

As Tuesday began, the Federal Reserve was set to begin deliberations on its interest-rate policy. Many investors expect the Federal Open Market Committee to reduce its target interest rate 50 basis points to 1%. Such a move would signal interest in providing the markets with capital to alleviate the ongoing credit crisis.

"Often times you see the market move, and you try to back into reasons the market moves," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research. Sparks said he's inclined to believe that today's rally is a bounce within a downtrend and is not based on cheap valuations or speculation about a Fed rate cut. "Unless [the rally] sustains itself for a significant period ... I don't see it as being meaningful."

"The hope is we've washed out," said Chip Hanlon, president at Delta Global Advisors. "The reason the market can't rally for any lasting period is investors can't trust that that's true." He said the credit crisis could reemerge in a collapse of the commercial real estate market that historically has followed declines in residential housing.