US stocks skyrocketed on Monday as investors cheered the new toxic-asset plan aimed at stabilizing the US banking system and reviving the economy. Shares also got a boost from better than expected home sales data.

The Dow Jones Industrial Average rallied 497.48 points or 6.84% to finish at 7,775.86. The S&P 500 climbed 54.38 points or 7.08% to end at 822.92. The Nasdaq Composite increased 98.50 points or 6.76% to 1,555.77.

U.S. Treasury on Monday unveiled the details about the government's latest plan to help rid banks of troubled assets clogging banks' balance sheets. The program will use $75 billion to $100 billion in capital from the troubled asset relief program, or TARP, and capital from private investors. The Treasury said in a statement "The goal of this program is to restart the market for legacy securities, allowing banks and other financial institutions to free up capital and stimulate the extension of new credit."  

Adding to the positive tone was a report showing unexpected jump in existing-home sales in February. The National Association of Realtors said that existing home sales rose 5.1% to a seasonally adjusted annual rate of 4.72 million units, from a rate of 4.49 million in the prior month. Economists had expected a reading of 4.45 million.

Shares of financials skyrocketed. Bank of America (NYSE: BAC) soared $1.61 or 26.01% to $7.80. Citigroup (NYSE: C) rallied 51 cents or 19.47% to $3.13. J.P Morgan (NYSE: JPM) surged $5.71 or 24.67% to $28.86. Wells Fargo (NYSE: WFC) gained $3.34 or 23.87% to $17.33. American Express Co. (NYSE: AXP) climbed $2.30 or 18.76% to end at $14.56.

The largest US aluminum maker Alcoa (NYSE: AA) jumped 86 cents or 13.15% to $7.40.

Energy stocks advanced. Exxon Mobil (NYSE: XOM) increased $4.44 or 6.72% to $70.53. Chevron Corp. (NYSE: CVX) added $4.44 or 6.86% to finish at $69.15.

Suncor Energy (NYSE: SU) announced on Monday that it will acquire Petro-Canada (NYSE: PCZ) in a 19.12 billion Canadian dollar (US$15.5 billion) deal. Shares of Petro-Canada soared $5.28 or 21.99% to $29.29.

Shares of General Electric (NYSE: GE), Caterpillar Inc. (NYSE: CAT) and Boeing Co. (NYSE: BA) each gained over 9%.

On the earnings front, early on Monday, Tiffany & Co. (NYSE: TIF) reported that its fourth-quarter profit plunged 76% to $31.1 million, or 25 cents a share, from $127.4 million, or 96 cents, in the prior year quarter. Revenue declined 20% to $841.2 million from $1.05 billion. Shares of the company jumped $3.14 or 15.52% to $23.37.

Walgreen Co. (NYSE: WAG) rose $2.29 or 9.43% to $26.58 after it said that its second-quarter net income slipped to $640 million, or 65 cents a share, from $686 million, or 69 cents, in the year-ago quarter. Revenue rose 7% to a record $16.5 billion.

European stocks settled with gains. The U.K. FTSE rose 109.96 points or 2.86% to close at 3,952.81. The German DAX and French CAC increased 2.65% and 2.81% respectively.

Asian stocks finished solidly higher. The Nikkei 225 jumped 269.57 points or 3.39% to 8,215.53. The Hang Seng index of Hong Kong surged 613.91 points or 4.78% to 13,447.42.

NYMEX crude oil for April delivery climbed $1.73 or 3.3% to settle at $53.80 a barrel.  
 
Disclosure: Author does not own any of the stocks discussed here.