Dow Jones Surged Biggest Daily Gains Since March 2003

U.S. stocks rallied more than 3 percent on Tuesday (11 March), giving the S&P 500 its best advance since October 2002, after the Federal Reserve said it would add up to $200 billion to strained credit markets in a coordinated effort with other central banks.

The Dow and Nasdaq rang up their biggest daily percentage gains since March 2003.

The Dow Jones industrial average (DJI) soared 416.66 points to 12,156.81.

The Fed said it was expanding a lending program and will accept a broader base of securities as collateral, including mortgage bonds whose value has declined as the housing bubble burst.

Shares of mortgage-related companies and banks led the way, helping the market recover after three days of losses. Stocks had been close to their lows for the year as recession fears mounted.

An extended rally hinges on the health of the beleaguered credit markets.

The key to any sustainable rally is going to be an improvement on the credit side.

The Fed's making a major effort to get liquidity and credit into the cracks and crevices of the financial system that need it the most.

Meanwhile, the dollar rose sharply following the Fed's move as concerns about a deepening credit crisis and U.S. recession abated.

The brief surge in U.S. crude oil futures prices to a record high above $109 a barrel helped shares of Exxon Mobil Corp, rise 5.1 percent to $86.68, making the oil company's stock the top gainer in the S&P 500.