Stocks Jump on Hopes for Greece Debt Rescue

The Dow Jones industrial average jumped back above 10,000 on hope that a resolution was near for Greece's debt crisis.

The Dow rose 150 points Tuesday, a day after closing below 10,000 for the first time in three months. The major indexes all gained more than 1 percent. Treasury prices slid as demand for safer investments fell.

Global markets bounced back on reports that plans are being developed in the European Union to rescue Greece. That raised hopes that policymakers will take bigger steps to contain debt troubles in other weak European economies including Portugal and Spain.

Though Greece's economy is small, that country's yawning budget gaps were undermining faith in the euro, Europe's common currency. Investors also believed that other countries might have trouble raising money in debt markets, which would hamper efforts to get their economies going again.

Related

Saints and Stocks? The Super Bowl Effect

Dow Closes Below 10,000 for First Time in 3 Months

WATCH: Save a Bundle With Tax Deductions

World stock markets have been tumbling in recent weeks on concerns that debt problems would spread. The euro is still down about 5 percent for the year, but rose for a second day against the dollar as the outlook improved for Greece.

Greece took steps Tuesday to calm markets, pledging to slash spending and raise fuel taxes.

The European debt problems are the latest obstacle to trip up the stock market after 10 months of steep gains. Stocks began retreating in mid-January after China said it would try to control its economy to avoid speculative bubbles. Things got worse when President Barack Obama announced plans to curb trading by large financial institutions.

"There's some euphoria that maybe it's not going to be blowing up," said Erik Davidson, managing director of investments for Wells Fargo Private Bank in Carmel, Calif., referring to easing fears over Greece. Davidson said some of the market's slide had been over concern that stocks had risen too far. The problems in Greece provided a handy excuse to sell, he said.