Wall Street flies after government rescues Citi

By Charles Mikolajczak

NEW YORK (Reuters) - Stocks soared on Monday, capping the best two-day run since the aftermath of the 1987 stock market crash, as the government's decision to rescue Citigroup spurred an enormous relief rally.

Dow component Citigroup, the second-largest U.S. bank, surged nearly 60 percent to $5.95 and gave one of the biggest lifts to the Dow as the bailout plan eased jittery investors' concerns regarding the financial sector. Last week, Citigroup's stock tumbled to its lowest level in about 15 years amid uncertainty over the bank's future.

"The markets love a bailout," said Brian Gendreau, investment strategist at ING Investment in New York. "It seems to have instilled a bit of confidence in the sector itself."

Adding to the optimism, President-elect Barack Obama named his team of economic advisors -- viewed as being favorable for Wall Street.

Obama appointed New York Fed President Timothy Geithner as Treasury secretary and Lawrence Summers, who has previously held the Treasury post, as director of the National Economic Council.

The Dow Jones industrial average raced up 396.97 points, or 4.93 percent, to 8,443.39. The Standard & Poor's 500 Index

jumped 51.78 points, or 6.47 percent, to 851.81. The Nasdaq Composite Index leaped 87.67 points, or 6.33 percent, to 1,472.02.

A RALLY TO REMEMBER

The Dow has advanced 11.8 percent, while the S&P gained 13.2 percent in their best two-day rally since the days following the October 1987 stock market crash.

The government's cash infusion for Citi represented the biggest U.S. bank bailout to date, lifting major financial stocks.

JPMorgan Chase rose 21.4 percent to $27.58, while Bank of America surged 27.2 percent to $14.59.

The S&P financial index climbed 18.8 percent in its best one-day percentage gain ever.

Wall Street briefly pared gains after President-elect Barack Obama named his economic team, as expected, but did not offer any specific dollar figures or other new details on a stimulus plan.

Shares of iPod maker Apple Inc advanced nearly 13 percent to $92.95 and gave the biggest boost to the Nasdaq 100. Microsoft shot up 5.1 percent to $20.69.

Campbell Soup Co, considered a recession-proof play, however, surprised investors with a disappointing full-year profit outlook, citing a stronger U.S. dollar. Campbell Soup's stock slid 7.6 percent to $33.52 on the NYSE.