Stocks Vaulted Higher by Afternoon Rally

The flagging auto market was also hurting foreign manufacturers. Honda (HMC Quote) announced it would cut production in Japan and Europe. Shares climbed 6.1% to $20.31.

Back in the financial space, government-controlled mortgage buyers Fannie Mae (FNM Quote) and Freddie Mac (FRE Quote) said they would cease foreclosures on some homes until January, as they give borrowers a chance to restructure their loans.

Separately, Freddie received a warning from the New York Stock Exchange that it's stock might be delisted, just days after Fannie got a similar notice. Freddie shares dropped 16% to 41 cents, while Fannie lost 9.1% to 30 cents.

Meanwhile, Bloomberg reported that the Federal Deposit Insurance Corp. may not include loans with maturities of 30 days or less in its $1.4 trillion debt-insurance program. By removing proposed insurance fees from the shortest-term debt markets, the move is expected to help stabilize the overnight lending rate that the Fed seeks to control.

Earnings statements from several technology companies were also bolstering sentiment. PC maker Dell (DELL Quote) announced earnings that declined year over year but beat analysts' estimates. However, revenue was light.

Salesforce.com (CRM Quote) had even rosier news. The Internet software firm reported a rise in profit on soaring revenue. Despite the encouraging quarterly results, Dell shares dropped 5.2% to $9.30, and Salesforce.com gave back 2.2% to $22.32.

Analyst actions gave another big-cap tech name a lift, as Oppenheimer upgraded software giant Microsoft (MSFT Quote) to outperform from perform with a $22 price target on the stock. Shares rocketed 12% to $19.68.