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.

On the other hand, said Hanlon, stocks are dramatically oversold at these levels. "They could rally at any time and the rally could be really significant. ... However, I think it's fair that investors don't trust any rally," he said. "We're not done yet."

Meanwhile, the Treasury Department is facing difficulties implementing its $700 billion program to purchase troubled assets from banks, according to a report in The Wall Street Journal. The report indicated that the plan faces delays in hiring managers for the assets.

Solid earnings reports from big-name commodities and energy companies were contributing to the rally in the major averages. As for earnings, BP ( BP), Europe's second-largest oil company, reported third-quarter earnings that increased 83% on high oil and natural gas prices, sending shares up 16% to $46.47.

Occidental Petroleum ( OXY), another oil-patch denizen, also reported a rise in earnings. Shares traded 18% higher to $49.69.

U.S. Steel ( X) also announced an encouraging third quarter, saying profit more than tripled. However, the company offered softer guidance for the fourth quarter. The stock soared 14% to $35.20.

German software firm SAP ( SAP) said its third-quarter profit slipped 5% and said it would not issue a revenue forecast for the remainder of this year. Shares nevertheless added 6% to $32.04.

Not all reports were rosy. Whirlpool ( WHR) reported a 7% decline in third-quarter earnings and said it plans to slash 5,000 jobs. The stock tumbled 8.3% to $45.87.

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In other company news, aircraft maker Boeing ( BA) came to a tentative agreement with the International Association of Machinists and Aerospace Workers union. The union had been on strike since Sept. 6. Shares climbed 15% to $48.91.

As for automakers, the Journal reported that General Motors ( GM) may secure a $5 billion government loan -- part of $25 billion in funding recently authorized by Congress -- to finance a purchase of fellow troubled automaker Chrysler. GM shares tacked on 15% to $6.25.

Elsewhere on the merger front, Huntsman ( HUN) and Hexion Specialty Chemicals faced a setback in their planned deal. The companies announced that they were willing to complete a merger, but have received notice from counsel to affiliates of Credit Suisse ( CS) and Deutsche Bank ( DB). The banks said they do not want to fund the deal today. Huntsman shares edged up 2.3% to $12.28.

In the financial space, shares of Morgan Stanley ( MS) and Goldman Sachs ( GS) had fallen during early trading amid rumors that a rally by Volkswagen had brought losses to the two banks. The stocks were able to recover, however. Morgan Stanley ended the day up 11% at $15.20, and Goldman edged up 0.7% to $93.57.

Retail titan Wal-Mart ( WMT) provided a forecast for its capital expenditure at its annual investor meeting, predicting capital expenditures of $13 billion through the end of its current fiscal year, down from $14.9 billion a year ago. The company said it will open fewer stores this year than last year in the U.S. and focus on additional expansion into emerging markets. Shares jumped 11% to $55.17.

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As for economic data, the Conference Board's read of October consumer confidence registered at an all-time low of 38, down from 61.4 in September and well below economists' predictions of 52.

In housing, the S&P Case-Shiller 20-city home price index declined 17% year over year in August. The 10-city index dropped 18%. The declines in both indices are the largest on record.

As for commodities, crude oil shed 49 cents to settle at $62.73 a barrel. Gold slipped $2.40 to $740.50 an ounce.

Longer-dated U.S. Treasury securities were declining in price. The 10-year was down 32/32 to yield 3.82%, and the 30-year was losing 2-10/32, yielding 4.18%. The Treasury announced a sale of $34 billion in two-year Treasury bills to raise money to continue to bolster the banking system. It plans to raise another $24 billion on Oct. 30.

Credit markets were loosening, as three-month dollar Libor, a measure of the rate banks charge one another for large loans, declined to 3.47% from 3.51% on Monday. The overnight Libor rate declined 2 basis points to 1.24%.

The dollar was rallying vs. its major foreign competitors, marking a 2.9% gain on the yen and lesser improvement against the euro and pound.

Overseas, European exchanges, including London's FTSE and Frankfurt's DAX, were mostly trading higher. Asian stocks had a mixed session, as the Nikkei in Japan and the Hang Seng in Hong Kong closed with gains.

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