NEW YORK — Speculation that governments in the U.S. and Europe will act to help their economies sent stocks surging to their best day this year.
Atlanta Federal Reserve President Dennis Lockhart said in a speech that weak job growth over the past two months highlighted the “halting and tenuous” recovery. If the trend continues, “further monetary actions to support the recovery will certainly need to be considered,” he said.
At the same time, news reports indicated that Germany and European Union officials were considering a plan to lend money from the European bailout fund to help rescue Spain’s hobbled banks.
In an ordinary stock market, neither development would likely cause a ripple. But the market has been anything but ordinary lately, posting decline after decline amid the financial crisis in Europe and the slowing economy in the U.S.
Traders now are hanging on rumors and speculation, said Jeff Kleintop, chief market strategist at LPL Financial. But the talk was enough to convince some that the worst was over for now.
As a result, the Dow Jones industrial average surged 286.84 points to close at 12,414.79, its biggest gain since December 20. The rally started early and gathered force in the afternoon. The charge turned the Dow Jones industrial average positive for 2012 and erased the biggest loss of the year less than a week after it happened: the 275-point plunge set off by a dismal U.S. jobs report on Friday.