Wall St. shares rally on recovery hopes

US stocks on Monday rallied, extending a bullish trend from last week as investors looked beyond economic woes in hopes of a quick recovery in the US economy.

Washington Mutual, the nation's largest thrift, is in talks with buyout shop TPG Inc. about a possible capital injection, according to The Wall Street Journal. The company, which has suffered big losses tied to subprime mortgages, would become the latest U.S. financial institution to reach such a deal.

Dealmaking is often regarded as a bullish sign and could signal that stocks are starting to recover from a long slump due to tight credit and a slowing economy.

In the first minutes of trading, the Dow Jones industrial average rose 47.46, or 0.38 percent, to 12,656.88.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 7.35, or 0.54 percent, to 1,377.75, and the Nasdaq composite index rose 15.73, or 0.66 percent, to 2,386.71.

(Agencies)