Wall Street rallied the most in five years after the Fed decided to boost liquidity in order to shore up banks battered by mortgage- related losses. The Dow and Nasdaq posted their biggest one-day percentage gains since March 2003. For the S&P 500 index, it was the biggest percentage jump since October 2002.

Financials had their day in the sun, with Citi, Lehman Brothers and Bear Stearns leading the way.

Shares of mortgage-related companies like Freddie Mac and Fannie Mae also rallied on the fed news, and posted double digit gains.

The commerce department reported that the u-s trade gap expanded in January amid soaring prices for imports such as crude.

The Dow gained 416.66 points, or 3.6%, to 12,156.81. The Standard & Poor's 500 index advanced 47.28 points, or 3.7%, to 1,320.65, while the Nasdaq composite index added 86.42 points, or about 4%, to 2,255.76.