US stocks surged 3 percent on Monday on speculation fresh proposals may emerge to help solve Europe's debt crisis and strong gains by US retailers during the holiday shopping weekend lifted sentiment. The rally was broad-based, with all 10 S&P sectors up more than 1 percent and all but four of the stocks in the S&P 500 stocks rising.
Efforts heated up on several fronts to ease Europe's sovereign debt crisis, which contributed to the benchmark S&P index's recent seven-day string of losses. Germany and France stepped up a drive to acquire powers to reject national budgets in the eurozone that breach European Union rules ahead of an EU summit on December 9. Sentiment also improved after an Italian newspaper report suggested the International Monetary Fund was preparing a rescue plan for Italy, but the IMF denied the report.
"It looks like we're seeing progress in the euro zone, and if that leads to a more stable Europe, the S&P could move back to at least 1,300," said Marc Pado, US market strategist at Cantor Fitzgerald & Co in San Francisco. The Dow Jones industrial average climbed 307.88 points, or 2.74 percent, at 11,539.66. The Standard & Poor's 500 Index was up 36.55 points, or 3.15 percent, at 1,195.22. The Nasdaq Composite Index soared 87.84 points, or 3.60 percent, at 2,529.35.
Retail stocks soared after stores racked up record sales over the Thanksgiving weekend. The S&P retail index advanced 3.4 percent while Best Buy Co Inc added 3.1 percent to $26.42 and Macy's Inc climbed 5.5 percent to $31.08. "These results show that people are focused on having a good holiday despite all the uncertainties in the world, which makes me think the market has more to go on the upside," Pado said.
Materials stocks were also big gainers, advancing on the back of higher commodity prices. The S&P materials index surged 3.7 percent, with Freeport-McMoRan Copper & Gold Inc jumping 5.9 percent to $35.83, and Alcoa Inc rising 5.8 percent to $9.47. US Steel Corp climbed 8.5 percent to $24.16. But some analysts think the gains were just a technical rebound as Wall Street came off its worst week in two months.
"An oversold trading opportunity is likely pending this week, given short-term indicators are increasingly oversold, but the longer-term technical background is increasingly at risk," said Robert Sluymer, analyst at RBC Capital Markets in New York. About 91 percent of New York Stock Exchange-listed issues rose, while 85 percent of Nasdaq stocks were in the green.