Wall Street Soars on Bank-Relief Measures

Updated from 11:20 a.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 514 points to 8965, and the S&P 500 jumped 55 points to 955. The Nasdaq was better by 110 points at 1759.

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%.

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.

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

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 will provide dollar liquidity to banks as needed. France and Italy are expected to detail their own plans later Monday. Germany, meanwhile, was preparing to expand a bailout package for its banks to $680 billion.

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