Monday's meteoric 936 point rise in the Dow Jones average could be a harbinger of steadier days to come if governments follow through on pledges to rescue ailing credit markets, local financial experts said.
"You put all of it together and what is happening is the market is regaining confidence," said Paolo Miranda, an assistant professor of finance at Purdue University Calumet in Hammond.
The key now will be how well governments and central banks follow through on commitments made at summits Friday through Monday, Miranda said.
The market was expected to rebound after eight days of precipitous losses that took the Dow down nearly 2,400 points, but few expected an advance of Monday's magnitude. It saw the Dow by far outstrip its previous record one-day point gain, 499.19, set during the waning days of the dot-com boom.
Markets also surged overseas, with Hong Kong's Hang Seng index up 10.2 percent, Britain's FTSE 100 up 8.26 percent and Germany's DAX index up 11.4 percent.
The private sector also had a big role to play in Monday's big market bounce, according to Alan Krabbenhoft, dean of the College of Business at Purdue University North Central in LaPorte.
The battle for Wacovia Bank was settled in Wells Fargo's favor during the weekend, and Mitsubishi UFJ Financial Group poured $9 billion into ailing Morgan Stanley.
"Last week there certainly was a great deal of panic," Krabbenhoft said. "So on Monday, there was a strong sentiment ... that the market was a fair bit oversold."
In the wake of the Group of Seven weekend summit in Washington, European governments pledged up to $2.3 trillion in guarantees and other emergency measures to save the banking system.
Moves like that were a recognition that for Europe and the world to do well, the United States must do well, according to Bala Arshanapalli, a professor of finance at Indiana University Northwest in Gary.
"It takes a while for things to stabilize," he said Monday. "But today it is a nice bounce, and it makes a lot of people happy."
Although the dramatic decline in markets in the last two weeks has drawn comparisons to the market crash that ushered in the Great Depression, governments today have many more tools for heading off disaster, Arshanapalli said.
"That was a totally different time because we're now so globalized and so dependent on each other," Arshanapalli said. "This is a totally different animal now."
The Associated Press contributed to this report.
