Stocks surge in relief rally

European leaders agree to a $955 billion bailout package to prevent the debt crisis from spreading. Oil jumps higher. McDonald's posts strong sales.

Posted on Monday, May 10, 2010 9:00 AM

Updated at 10:30 a.m ET

Stocks were surging this morning after European Union finance ministers late Sunday agreed to a massive 750 billion euro ($955 billion) bailout plan -- an effort to stabilize the euro and prevent Greece's sovereign debt crisis from spreading across the eurozone.

At 10:30 a.m. ET, the Dow Jones Industrial Average ($INDU) had jumped 376 points, or 3.6%, to 10,757 after losing 140 points on Friday. The Nasdaq Composite Index ($COMPX) had jumped 97 points, or 4.3%, to 2,363, and the Standard & Poor's 500 Index ($INX) was up 44 points, or 4%, to 1,155.

All 30 Dow components were up today, and all 100 of the Nasdaq 100 Index ($NDX) were higher.

Bank of America (BAC) was up $1.06, or 6.5%, to $17.24, Citigroup (C) jumped 24 cents, or 6.1%, to $4.24. Apple (AAPL) was up $15.08, or 6.4%, $250.95, and Intel (INTC) rose $1.14, or 5.4%, to $22.45.

Bailout plan boosts European markets
The biggest contribution to the bailout plan, 440 billion euros ($570 billion), will come from EU government-backed loans. The International Monetary Fund will contribute 250 billion euros, and an EU emergency instrument will contribute 60 billion euros.

"These steps announced by the EU, IMF, and ECB are impressive in total, and indicate that the authorities are finally coming to grips with the contagion threat to a number of countries stemming from the Greek debt crisis," Howard Archer, IHS Global Insight chief European and U.K. economist, wrote in a note to clients.

"As a result, they should, temporarily at least, alleviate market concerns over the ability of Greece, Portugal, Spain, and Ireland to meet their funding requirements over the next three years," he wrote.

Overseas markets also surged today. London's FTSE 100 Index ($FTSE) jumped 4.5%, and the CAC 40 Index ($PARI) surged 9.3%. The MSCI EAFE Index (EFA), which is an aggregate of 21 country indexes, shot up 6.5%.

The European Central Bank said after the announcement that it is ready to buy eurozone government and private bonds "to ensure depth and liquidity" in markets.

The euro shot higher this morning. Worries about Greece's debt crisis and fears that it will spread to Portugal, Spain and other European countries had slammed the euro, causing the currency to tumble 4.3% last week -- the biggest drop since after Lehman Brothers went under in September 2008. The fears also caused $3.7 trillion to be erased from the value of global stock markets last week, Bloomberg News reported.

"We are going to defend the euro," Spanish Economy Minister Elena Salgado told reporters Sunday. "We think we have a duty for more stability for our currency. We will do whatever is necessary." All 27 EU members attended the meeting.

Crude was up $2.33 to $77.44 a barrel.

IMF approves its chunk of Greek bailout
The International Monetary Fund, meanwhile, approved a 30 billion euro ($38 billion) loan to Greece over the weekend, with an immediate 5.5 billion euro disbursement to help prevent the country's growing debt crisis from worsening. The loan is part of the 110 billion euro ($147 billion) package with the European Union to help the troubled country.

It is the biggest financial commitment ever to any one country.

Under the terms of the deal, Greece will cut its budget deficit from a record 13.6% of gross domestic product in 2009 to 8.1% this year. Greece will cut its deficit to below the EU's 3% limit by the end of 2014.

McDonald's sales sizzle
McDonald's (MCD) said this morning that sales at stores open at least one year rose 4.9% in April, topping analysts' expectations of a 4.5% gain. Sales jumped 3.8% in the U.S., 5.3% in Europe and 3.9% in Asia, Middle East and Africa.

Shares of the fast-food giant rose $2.34, or 3.4%, to $70.35.