U.S. stocks surged this morning, extending the biggest two-day global rally since 1970, as the government moved to halt the credit-market seizure and regulators cracked down on investors who were short-selling shares of financial companies, Bloomberg reported.

The Standard & Poor’s 500 index rose 3.4 percent in early trading after benchmark indexes from the United Kingdom to China posted record advances. Washington Mutual Inc. and Wachovia Corp. jumped more than 25 percent after U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke proposed removing troubled assets from banks’ balance sheets and the Securities and Exchange Commission banned short sales of financial firms.

“This is just a massive effort to try to instill some confidence,” said James Dunigan, managing executive of investments at PNC Wealth Management in Philadelphia, which oversees $66 billion in assets.

The S&P 500 advanced 41.16 points to 1,247.67 at 10:25 a.m. in New York after a 4.3 percent rally on Thursday. The Dow Jones industrial average surged 348.4 points, or 3.2 percent, to 11,368.09. The MSCI world index of 23 developed nations increased 55.4 points, or 4.6 percent, to 1,272.17, as Europe’s benchmark index climbed 6.7 percent, the most since data for the index began in 1987, and Asia’s index added 4.8 percent.

Five stocks rose for each that fell on the New York Stock Exchange.



The S&P 500 erased its decline for the week. The benchmark index for U.S. equities had tumbled 4.7 percent twice in the past five days after Lehman Bros. Holdings Inc. filed for bankruptcy, the U.S. government bailed out American International Group Inc., in exchange for a 79.9 percent stake in the company, and Merrill Lynch & Co. Inc. was forced to sell itself to Bank of America Corp.



More than 1.08 billion shares have traded on the New York Stock Exchange so far this week, five times more than at the same time a week ago. All 10 industry groups in the S&P 500 advanced as better-than-estimated earnings at Oracle Corp. helped boost technology companies and higher oil prices added to gains in energy producers.

U.S. Treasury securities and European government bonds fell today on speculation Paulson and Bernanke’s plan will increase demand for stocks over bonds. The Treasury Department also announced a $50 billion program to insure the holdings of money-market mutual funds for a year.

The dollar rose the most in more than five months against the yen, while the cost of default protection on corporate bonds dropped by the most since the bailout of The Bear Stearns Cos. Inc. in March.