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Earlier in the day, Neel Kashkari, the Treasury Department official tapped to oversee the government's bailout of the financial markets, outlined how the government will utilize the $700 billion rescue plan that was passed earlier this month.
"Treasury is implementing its new authorities with one simple goal - to restore capital flows to the consumers and businesses that form the core of our economy," Kashkari said.
Kashkari noted that seven teams have been formed within the Treasury Department to implement the financial rescue plan, including teams to buy different types of assets, like mortgage-backed securities, and teams to focus on implementing the more regulatory aspects of the program.
Meanwhile, Kansas City Federal Reserve President Thomas Hoenig said Monday that the saving grace for the financial system should come from private institutions. Although Hoenig said that there is a place for the Fed and the Treasury Department to interact in markets, he called for the financial industry to "step up and lead through this."
The U.S. needs a "21st century J.P. Morgan," Hoenig said, referencing the financial firm's role in navigating the U.S. through a severe financial crisis in the early 20th century.
Comment on the market performance, Tom Schrader, managing director of U.S. equity trading at Stifel Nicolaus told RTT News that the market has "compressed the spring to the point of maximum pain" and has reached an "intermediate bottom."
While Schrader said we're probably not going to go back up the way we came down, he stressed that we "certainly should start the process of a rally back up," predicting gains of 10 to 15 percent off the lows. In addition, Schrader said it is a "great time to invest cautiously and conservatively."
In other news, Wells Fargo (WFC | Quote | Chart | News | PowerRating) said that the Federal Reserve has approved its acquisition of Wachovia (WB | Quote | Chart | News | PowerRating), including all its subsidiaries. The acquisition, which still requires the approval of Wachovia shareholders, is on schedule to be completed by the end of this year.
The major averages have seen some further upside in recent trading, reaching new highs for the session. The Dow is currently up 539.70 at 8,990.89, the Nasdaq is up 117.36 at 1766.87 and the S&P 500 is up 59.40 at 958.62.
Sector News
After seeing substantial weakness in recent sessions, brokerage stocks have regained some ground over the course of the trading session. The Amex Securities Broker/Dealer Index is currently up 11.6 percent, moving further off the five-year closing low it set last Thursday.
Morgan Stanley (MS | Quote | Chart | News | PowerRating) is helping to lead the sector higher, with the financial services giant currently up 66 percent after Mitsubishi UFJ Financial Group invested $9 billion to acquire 21 percent of the voting rights of Morgan Stanley.
Resource stocks also continue to post particularly strong gains, benefiting from an increase in commodities prices. Considerable strength remains visible among steel stocks, as reflected by the 15.2 percent gain currently being shown by the Amex Steel Index.
Within the resource sector, oil service stocks are also posting notable gains, rebounding along with the price of oil. With crude for November delivery currently up $3.45 at $81.15 a barrel, the Philadelphia Oil Service Index is currently up 11.4 percent.
Despite the increase in oil prices, oil-sensitive airline stocks are also posting standout gains, contributing to a 9.7 percent gain by the Amex Airline Index. UAL Corp. (UAUA | Quote | Chart | News | PowerRating) and Continental Airlines (CAL | Quote | Chart | News | PowerRating) are turning in two of the best performances.
Most of the other major sectors are also showing strong upward moves, with significant strength visible among health insurance, telecom, and software stocks. Among software stocks, Dow component Microsoft (MSFT | Quote | Chart | News | PowerRating) is currently up 12 percent.
Stocks In The News
Among individual stocks, shares of Qwest Communications (Q | Quote | Chart | News | PowerRating) are seeing significant strength in early afternoon trading, with the telecommunications services provider currently up 21.6 percent after ending Friday's trading at a six-year closing low.
The gain by Qwest comes after the company announced that it has reached a new tentative agreement with the Communications Workers of America regarding a four-year contract covering about 20,000 Qwest workers. Last month, the CWA rejected a tentative three-year agreement.
Shares of Qimonda (QI | Quote | Chart | News | PowerRating) and Micro Technology (MU | Quote | Chart | News | PowerRating) are also showing strong upward moves after Qimonda agreed to sell its 35.6 percent stake in Inotera Memories Inc. to Micron for $400 million. Qimonda is currently posting a 14.5 percent gain, while Micron is currently up 15.5 percent.
Meanwhile, shares of Affymetrix (AFFX | Quote | Chart | News | PowerRating) are currently down 19.1 percent after the biotechnology company said it expects third quarter revenue of approximately $75 million compared to analyst estimates of about $90.1 million. At it low for the session, Affymetrix was at a record intraday low.
Other Markets
In overseas trading, most of the major Asia-Pacific markets ended Monday's trading higher, with traders picking up stocks at reduced levels following recent weakness. The Japanese market remained closed on account of a public holiday.
The major European markets also turned in particularly strong performances. The French CAC 40 Index and the German DAX Index closed up 11.2 percent and 11.4 percent, respectively, while the U.K.'s FTSE 100 Index rose 8.3 percent.
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