Stocks are posting massive gains in early afternoon trading on Monday, as investors respond to Treasury Secretary Tim Geithner's plan to help the banking sector. Better-than-expected existing home sales data has also generated some buying interest.
Geithner's plan will involve setting up an investment fund to buy mortgage-related securities and other assets that are driving down the balance sheets of banks. The new Public Private Investment Program would combine taxpayer money with private funds, aiming to buy loans and free up banks to renew lending.
The Treasury's response involves using up to $100 billion in funds from the $700 billion financial rescue plan passed in 2008 in addition to capital from private investors to generate an estimated $500 billion to purchase the toxic assets, a number that could double to $1 trillion over time.
On the economic front, existing home sales unexpectedly rose in the month of February, according to a report released by the National Association of Realtors on Monday, with sales rebounding after hitting a twelve-year low in the previous month.
The report showed that existing home sales rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. Economists had expected sales to slip to a 4.45 million unit rate.
The major averages have moved roughly sideways in recent trading, hovering near their best levels of the day. The Dow is currently up 309.19 at 7,587.57, the Nasdaq is up 58.45 at 1,515.72 and the S&P 500 is up 33.60 at 802.14.
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