The Standard & Poor's 500 Index surged 2.8 percent to 1,187.54 at 2:16 p.m. New York time. The Stoxx Europe 600 Index climbed 1.7 percent to cap a four-day rally of 8.5 percent, its largest over that stretch of time since November 2008. The 17- nation euro currency appreciated 2.1 percent versus the dollar as it strengthened against 11 of 16 major peers. The S&P GSCI gauge of raw materials increased 2.1 percent. Costs to protect against a European sovereign default decreased
.The S&P 500 has rebounded more than 8 percent from a 13- month low on Oct. 3 amid optimism that European leaders will succeed in taming the debt crisis and as U.S. economic data topped estimates. German Chancellor Angela Merkel and French President Nicolas Sarkozy said yesterday they will deliver a plan to recapitalize European banks and address the Greek debt crisis by the Nov. 3 Group of 20 summit. Reports this week may show U.S. retail sales increased in September at the fastest pace in six months, adding to evidence that growth is rebounding.
'Risk-On Day'
"It's a risk-on day," Stephen Wood, who helps oversee about $163 billion as the New York-based chief market strategist for Russell Investments, said in a telephone interview. "Is it a relief rally? Yes, in some ways," he said. "While a Greece default is not something that can really be addressed or avoided, the consequences on the banking system can be avoided."
The S&P 500 added to last week's 2.1 percent advance and climbed above its highest closing level since Sept. 20. Gauges of financial, commodity and energy companies rose more than 3.6 percent for the biggest gains among 10 industries.
Citigroup Inc. and Bank of America Corp. rallied more than 4.7 percent to lead gains in all 24 stocks in the KBW Bank Index. Freeport-McMoRan Copper & Gold Inc. and ConocoPhillips climbed more than 4 percent as commodities rallied.
The Federal Reserve will release the minutes of its latest interest-rate setting meeting tomorrow. Data this week may show U.S. retail sales increased in September at the fastest pace in six months, helping to ease concern the recovery is faltering. The 0.7 percent rise in September retail sales anticipated by economists in a Bloomberg survey follows better-than-expected jobs figures reported last week, a rebound in construction spending in August and an acceleration in manufacturing in September.
Earnings Season
Earnings per share for the S&P 500, excluding financial companies, are forecast to have increased 14 percent in the third quarter, the smallest gain since the end of 2009, analysts' estimates compiled by Bloomberg show. Alcoa Inc., the biggest U.S. aluminum producer, will report earnings tomorrow after U.S. markets close, the first member of the Dow Jones Industrial Average to release third-quarter results.
It's time to "extend risk," Jonathan Golub, chief U.S. market strategist at UBS AG, wrote in a note to clients today. "As macro concerns subside, we believe that the stocks which have experienced the greatest price declines are likely to snap back the quickest."
Industrial, Commodity Shares
Golub said industrial, raw material and energy shares are the most attractively valued. As the S&P 500 retreated from a three-year high at the end of April, those industries slid more than 21 percent through Oct. 7. The benchmark gauge slumped 15 percent during the same period.
The euro traded at $1.3653 after Merkel said European leaders will do "everything necessary" to ensure that banks have enough capital. The shared currency weakened on Oct. 7 after Fitch Ratings lowered Spain's foreign and local debt to AA- from AA+ and cut Italy's to A+ from AA-, citing an "intensification" of the region's crisis.
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