Stocks rallied and the dollar fell on a renewed bout of risk aversion as Treasury secretary Tim Geithner announced details of the government's plan to buy legacy assets off the balance sheets of the nation biggest financial institutions. Today's move came after executives at Citigroup, Bank of America and J.P. Morgan Chase said recently that their firms have been profitable this year and after new steps to unfreeze frozen credit markets were announced by the Federal Reserve last Wednesday.

All 30 DOW components advanced on the day, led by a strong gain in financials and industrials. Alcoa, American Express, Bank of America, Citigroup and J.P. Morgan Chase all posted double-digit percentage gains.

Some traders were still suspicious that the rally which started 2 weeks ago could fizzle at some point, with a number of them pointing to 9000 on the DOW as being a likely area of resistance. A move to that level would be about a 38% gain from the low made on March 9.

Aside from banks themselves, the shares of asset managers who stand to benefit from increased trading in credit securities also showed solid gains on Monday. Blackstone Group jumped more than 24%. BlackRock was up 13% and Fortress Investment Group rose 45%.

Still in question is the extent to which banks may choose to participate; if bidders offer prices too low, the banks can still refuse to sell. And if prices come in higher than expected, which is possible because asset managers who will be doing the purchasing stand to make good-sized profit, banks may choose to hold their securities in the hopes the economy will improve and the demand for them will rise.

At Monday’s close of floor trading on the NYSE, the DOW was on 7775.86 with a gain of 497.48 points (6.84%) while the S&P finished on 822.81, up 54.37 points (7.07%). The technology-heavy NASDAQ closed on 1555.77 after rising 98.50 points (6.76%).

The dollar traded in pure risk-acceptance mode as stocks made their huge advance. On the day, the greenback ended up with a loss of 0.42% on the euro, 0.75% to sterling 2.46% and 2.52% against Australia's currency as it gained 1.19% on the yen.

Treasuries were sold as stocks advanced. Yield on the 2-year note rose 3.6 basis points to 0.807% while yield on the 10-year note gained 4.8 basis points to 2.679%.

Crude for April delivery was recently trading up $1.78 (3.36%) to $53.82 per barrel.

Gold for April delivery was recently trading down 8 $17.90 (-1.87%) to $937.90 per ounce.