A weekend of strong holiday shopping in the U.S. and radical proposals for stanching Europe's debt crisis sent stocks soaring Monday. The Standard & Poor's 500 index broke a seven-day losing streak and the Dow Jones industrial average jumped 291 points, its biggest gain in a month.
Markets in Europe also surged as leaders there discussed previously unthinkable approaches for containing the region's debt troubles, such as joint bond sales and much tighter fiscal controls. France's CAC-40 jumped 5.5 percent. Indexes in Germany and Italy rose 4.6 percent. The battered euro rose against the dollar.
European finance ministers discussed aggressive measures to stop the debt crisis from destroying the 17-nation currency union. In a sign of how desperate the situation has become, one proposal being discussed ahead of a financial summit Tuesday calls for having nations cede control over their budgets to a central European authority. Profligate borrowing and spending by Greece and other countries helped trigger the two-year old crisis.
Another plan calls for Europe's most stable economies like Germany, France and Austria to jointly sell bonds to provide assistance to the region's most indebted members.
Retail stocks, meanwhile, spiked after initial reports showed a record number of shoppers hit the mall or bought gifts online during the holiday weekend. Macy's Inc. rose 4.7 percent and Best Buy Co. rose 3.4 percent. Thanksgiving weekend is a make-or-break time for many retailers. Black Friday is often the biggest retail sales day of the year.
The Dow soared 291.23 points, or 2.6 percent, to 11,523.01. Alcoa Inc. jumped 5.7 percent, the most of the 30 stocks in the Dow. The Dow plunged 564 points last week on fear that Europe's debt crisis was spreading to large countries like Spain, Italy and even Germany.
The S&P 500 rose 33, or 2.9 percent, to 1,192.55. The gains came across industries and sectors; only six stocks in the index fell. The Nasdaq composite rose 85, or 3.5 percent, to 2,527.34.
As the threat of an imminent meltdown in Europe ebbed, U.S. investors focused on a strong weekend of holiday shopping. A record 226 million shoppers visited stores and websites during the four-day holiday weekend starting on Thanksgiving Day, up from 212 million last year, according to early estimates by The National Retail Federation. They spent more, too: The average holiday shopper spent $398.62 over the weekend, up from $365.34 a year ago. That's an encouraging sign for consumer spending.
The retail numbers added to a growing set of indicators, including steady drops in the number of new applications for unemployment benefits, that suggest the U.S. economy is continuing to heal. As recently as August, there were widespread concerns that the U.S. could enter another recession.
"This goes in stark contrast to the gloom and doom that had been over markets," said Rob Lutts, president of Salem, Ma.-based investment firm Cabot Money Management. "A lot of the stocks I follow have been more oversold than any time I can remember in the last few years."
That negativity has helped drag the S&P 500 down 5.9 percent in November. Monday's gains broke a seven-day losing streak for the index, its longest since the wild market swings from this August. That slide took the S&P down 7.9 percent.
Bank stocks rose sharply as investors became less fearful of an imminent freeze-up in Europe's financial system. Citigroup Inc. leapt 6 percent and Morgan Stanley jumped 4.1 percent.
Despite the big move in the markets Monday, many troubling questions remain about the situation in Europe. Borrowing rates remain onerously high for several major European countries including Spain and Italy. That's a sign markets still don't believe enough is being done to get the region's finances in order.
Credit rating agency Moody's warned on Monday that the "rapid escalation" of Europe's financial crisis is threatening the creditworthiness of all euro zone governments, even the most highly rated. Only six of the euro zone's 17 countries have the top rating _ Germany, France, Austria, the Netherlands, Luxembourg and Finland.
Also, the Organization for Economic Cooperation and Development issued a report Monday saying the continued failure by EU leaders to stem the debt crisis "could massively escalate economic disruption" and end in "highly devastating outcomes."
After the market closed, there was another reminder of the debt troubles still looming in Washington. The Fitch ratings agency lowered its outlook on the U.S. government's credit rating following the failure of a congressional panel to agree on long-term budget cuts.