Stocks climbed Monday morning as investors welcomed the government's revamp of its AIG bailout and news that China has initiated a $586 billion stimulus plan.
All three major gauges had been higher in the early going.
Monday brought a heavy spate of corporate news, including AIG's huge restructuring and Circuit City's bankruptcy.
The federal government said Monday it was restructuring AIG's bailout plan, buying $40 billion in preferred stock, reducing its original $85 billion bridge loan to $60 billion, and cutting the interest rate by 5.5 percentage points. The total reworked deal is worth about $152.5 billion. The reworking reflects and acknowledgement that the initial plan was insufficient to reverse AIG's slide.
Additionally, AIG reported a steep quarterly loss of $24.5 billion in the third quarter. Shares gained 20%.
Fannie Mae another company that nearly went under as a result of the subprime mortgage crisis, reported a steep quarterly loss of $29 billion. A large portion of the loss was due to a change in the way it accounts for tax credits. But even without that, results were far worse than a year ago, due to bad mortgage bets. In September, the government took over Fannie Mae and Freddie Mac. Shares gained 4%.
Package-delivery firm DHL became the latest corporation to announce massive layoffs. DHL said it will cut 9,500 jobs as it ends air and ground operations within the U.S., focusing only on deliveries between the U.S. and other nations.
The recession has sparked layoffs in a number of industries, with the Labor Department reporting on Friday that the 2008 tally stands at 1.2 million.
Circuit City said last week that it would cut 17% of its domestic workforce and close 150 stores amid the sluggish economy and consumer spending slowdown. On Monday, the company filed for bankruptcy protection.
On the upside, McDonald's said worldwide sales at stores open a year or more jumped 8.2% in October, thanks to overseas consumers and demand for cheap food amid the recession. Shares gained 2%.
COMEX gold for December delivery rallied $29.40 to $763.60 an ounce.
The credit market continued to improve. The 3-month Libor fell to 2.24% from 2.29% Friday, a nearly four-year low, according to Dow Jones. Overnight Libor inched higher to 0.35% from 0.33% Friday, after hitting an all-time low of 0.32% last week. Libor is a key interbank lending rate.
Treasury prices dipped, lifting the yield on the benchmark 10-year note to 3.81% from 3.78% late Friday. Treasury prices and yields move in opposite directions.