U.S. stocks staged the largest rally of the year this morning, rebounding from a rout that wiped out $1 trillion yesterday, and Treasuries fell amid speculation that the Federal Reserve may signal plans to safeguard the economic recovery, Bloomberg reported.

The Standard & Poor’s 500 Index had surged 2.7 percent at mid-day for its biggest gain since September after losing 6.7 percent yesterday, the most since December 2008.

Fed policy makers are meeting today after the unprecedented downgrade of the government’s top credit rating shocked investor confidence in the economic recovery. Speculation is growing that Fed Chairman Ben Bernanke may announce steps to pump up growth.

Other indicators have improved as well. Citigroup Inc. led banks higher as investors bought shares at two-year lows following the U.S. credit-rating downgrade. The 24-company KBW Bank Index rose 4.2 percent as Citigroup gained 10 percent and Bank of America Corp. advanced 7.5 percent. Both fell more than 16 percent yesterday.

The MSCI All-Country World Index rebounded after dropping as much as 2 percent today.