Bank of American’s Merrill Lynch reported a 13% annualized gain on Monday as the Federal Reserve’s interest rate hike ended the longest period of double-digit growth since the early 1980s.
The S&P 500 gained 2.4%.
The Dow Jones Industrial Average climbed more than 600 points.
The Nasdaq gained more than 400 points.
Wall Street and financial markets were on edge as the Fed moved to ease its tightening measures for the first time since September.
It also extended the benchmark bond buyback program for six months, a move designed to help stimulate the economy and prevent a financial meltdown.
The Fed raised its benchmark overnight lending rate to 0.25%, the first step in a two-step plan that would start by lowering the benchmark rate for overnight loans to 1%.
The Fed has previously said it would continue to buy up bonds to keep rates low, but the latest move to keep them low will be a key part of its policy response.
Analysts say the Fed’s move is likely to trigger a correction in the market.
The Dow is up more than 4% in the last 24 hours, the S&P 500 is up about 1%, the Nasdaq is up 2%, the Russell 2000 is up 1.5%, and the Dow Jones industrial average is up almost 2%.
“The Fed has now ended its last year of asset purchases.
The bond market is going to be very volatile and this is one of the most important components of the market,” said Andrew P. Sienkiewicz, chief economist at Barclays.
“It’s going to create some uncertainty about the economy, but it is very unlikely that we’ll see a massive market selloff.”
The Fed’s moves come after the Treasury Department cut its key benchmark interest rate to a record low, the lowest since the Great Depression.
The move followed a surprise vote by the Federal Deposit Insurance Corp. to lift its benchmark lending rate for short-term deposits to 0% from 0.5%.
The move is expected to boost lending to people who can’t afford to buy loans and the banks that have been hardest hit by the recession.
Treasury Secretary Jacob Lew said Monday the move was intended to provide a boost to businesses, particularly those that rely on mortgage loans.
The central bank said the new rate will make it easier for borrowers to borrow more and more of the money they need to keep their businesses running.
Bank of Americans reported an 11% rise in profits and revenue, or about $3.9 billion, on Monday.
The bank said it saw strong demand for its home mortgage lending products, which includes credit insurance and refinancing.
The stock index is up over 1% over the last month.
The dollar fell to a six-week low against a basket of currencies.
The euro rose to $1.0519 from $1,934.25.
The Japanese yen weakened to 79.23 yen from 79.30 yen.