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NEW YORK (CNNMoney) — U.S. stocks rallied Tuesday as investors grew more optimistic about Europe’s debt crisis being resolved.
The Dow Jones industrial average () surged 256 points, or 2.3%, in late morning trading. The SP 500 ( ) added 29 points, or 2%. The tech-heavy Nasdaq ( ) gained 59 points, or 2.3%.
The gains came as markets around the world rallied on hopes that European leaders were getting more aggressive in coming up with a debt crisis resolution, adding fuel to the banking sector.
In Europe, major indexes in London, Frankfurt and Paris were up between 3.3% and 4.6%. Asian markets closed with gains of between 2.8% and 4.2%.
The euro strengthened against rival currencies, including a 0.7% gain versus the U.S. dollar.
“With a glimmer of a hope for Europe, equity markets are clawing back more lost ground,” said Camilla Sutton, currency strategist at Scotia Capital.
On Monday, stocks surged in the last hour of trading, as investors focused on reports that a new plan to ease Europe’s debt crisis was afoot.
The plan would allow troubled banks to swap bad debt for bonds backed by the European Investment Bank.
But doubts remain that the action, should it occur, would bring the crisis to a complete resolution given the continent’s extremely heavy debt burden.
Europe’s debt crisis: 5 things you need to know
Still, even the hint of a resolution was enough to boost financial stocks for a second day.
Investors scooped up shares of major U.S. banks, which have been among the worst performing stocks this year. JPMorgan Chase (Fortune 500), Bank of America ( , Fortune 500), Wells Fargo ( , Fortune 500), and Goldman Sachs ( , Fortune 500) all rose.,
Gold and silver prices also rebounded, bolstering shares ofIshares Silver Trust (Fortune 500).) and Spdr Gold Trust ( ), as well as gold and silver miners, including Silver Wheaton ( ), BHP Billiton ( ) and Freeport-McMoran ( ,
Gold prices jumped 4.8% to $1,683 an ounce, while silver rallied nearly 11% to $33.20 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 1.97% from 1.81% late Monday.
Economy: Home prices across 20 major U.S. cities rose 0.9% in July from a month earlier, according to the SP/Case-Shiller index. But prices were still 4.1% lower than 12 months earlier.
A key measure of consumer confidence remained unchanged in September.
The Conference Board said its consumer confidence index, which had dropped sharply in August, came in at 45.4 this month.
Economists had forecast an increase to 46.6 in September from 44.5 in August.
Companies: Shares of Walgreen (Fortune 500) slid after the drugstore chain reported better-than-expected profit and sales but still failed to reach a resolution with union workers.,
World markets: European stocks rose in afternoon trading. The DAX () in Germany surged 4.3%. Britain’s FTSE 100 ( ) jumped 3% and France’s CAC 40 ( ) rallied 3.8%.
Asian markets ended higher. The Shanghai Composite () added 0.9%, the Hang Seng ( ) in Hong Kong gained 4.2%, and Japan’s Nikkei ( ) ended the day up 2.82%,