NEW YORK — U.S. stocks made their biggest one-day gain in 13 months Monday, re-establishing gains for the year, after an agreement on a nearly $1 trillion rescue plan to stabilize Europe lured investors back to a badly shaken market.
After last week’s wipeout of gains made in 2010, the Dow Jones industrial average closed up 404.71 points, or 3.9 percent, to 10,785.14, its biggest daily gain since March 2009, and enough to bring it safely back into positive territory for the year.
“Shorts are caught in a big way today after Friday’s poor action and thinking that the EU would be too slow to react. It’s not a new ball game today, but it is a new inning,” said Elliot Spar, market strategist at Stifel, Nicolaus &Co.
So-called short investors bet that a stock price will fall.
All of the Dow’s 30 components climbed. Caterpillar Inc. shares rallied 7.4 percent, leading the index of established companies, followed by 6.9 percent gains in shares of Bank of America Corp. and General Electric Co.
Also bolstering the blue chips, Boeing Co. rose 6.4 percent after Goldman Sachs raised its rating on the commercial aircraft-manufacturer to conviction buy from neutral.
Shares of discount giant Wal-Mart Stores Inc. lagged the broader index, up just 0.3 percent.
The S&P 500 Index closed up 48.85 points, or 4.4 percent, to 1,159.73, with all 10 of its industry groups rising.
Industrials and financials, two of the hardest hit by investor jitters over Europe’s potential debt crisis, led the gains on the S&P 500.
Aflac Inc. shares rallied 12 percent. Shares of the insurer fell sharply last week after the company said it held nearly $2 billion in bonds tied to financial institutions in Greece and Portugal.
Genworth Financial Inc.’s shares gained nearly 13 percent, while Marshall &Ilsley Corp. shares rallied 12 percent.
“While the volatility of last week has reawakened memories of the awful fourth quarter of 2008, it also appears to have spurred European policy makers into decisive and united action,” said David Kelly, chief market strategist at JPMorgan Funds.
For every stock on the decline, about 18 rose on the New York Stock Exchange, where nearly 1.9 billion shares traded. Composite volume exceeded 7.2 billion.
Among the few notable decliners, Dean Foods Co. shares fell 28 percent after the dairy goliath reported a sharply lower first-quarter profit and a lackluster earnings outlook.
Markets also rocketed higher in Europe, where shares surged more than 6 percent, in their best single-day performance since late 2008.
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