Stocks gain back losses from last week

Stocks are having their longest rally since early July. A $19-billion corporate buying spree and encouraging economic news from Japan sent the Dow Jones industrial average up nearly 214 points and erased its losses from last week.

The return of what's called "Merger Monday" on Wall Street made investors more optimistic about the future. So did a report that Japan's economy shrank less than feared following the March 11 earthquake and tsunami. That helped temporarily ease worries that the U.S. economy may slide into another recession.

The Dow rose 213.88 points, or 1.90 percent, to 11,482.90. It has gained 762.96 points since Thursday. That's the best three-day point gain since it rose 927.18 in November 2008, during the depths of the financial crisis. The Dow is also up 7.1 percent over the three days, the biggest percentage gain since it rose 9.5 percent the first three days of the bull market in March 2009.

The Standard & Poor's 500 index rose 25.68, or 2.18 percent, to 1,204.49. The Nasdaq composite index rose 47.22, or 1.88 percent, to 2,555.20.

Markets may have stabilized the last three days, but financial analysts warned investors not to assume that stocks have fully settled down after last week's swings.

The Dow rose or fell by at least 400 points in four straight days for the first time ever. The first-ever downgrade of the U.S. credit rating triggered the volatility. It was worsened by concerns that Europe's debt problems are worsening and that the U.S. economy is weakening.

"You might have these moments of quiet, but the debt crisis in Europe did not go away," said John Hailer, chief executive for the U.S. and Asia of Natixis Global Asset Management. "Our issues with the debt, with what our tax policy is going to be going forward, our unemployment did not go away."

More swings could come this week. Leaders of France and Germany meet Tuesdayto discuss Europe's debt problems.