NEW YORK (MarketWatch) — U.S. stocks surged Thursday, with the Dow industrials closing above where it stood just ahead of the collapse of Lehman Brothers, with investors around the globe embracing the Federal Reserve’s $600 billion plan to stoke the economy.

“It seems like the reflation trade is back in full force,” Jack Ablin, chief investment strategist at Harris Private Bank, said of investor bets that the global economy would rebound, pushing up the price of assets, including equities and commodities.

The Dow Jones Industrial Average DJIA, +0.53% gained 219.71 points, or 2%, to 11,434.84, its first finish above where it ended on Sept. 12, 2008.

The Dow fell 504 points on Sept. 15, 2008, the day of Lehman’s bankruptcy filing.

Peter Boockvar, equity strategist at Miller Tabak, downplayed the significance, saying it would be an apt point of comparison “if the Fed wasn’t printing enormous amounts of money in a blatant debasement of the U.S. dollar.”

Bank of America Corp. BAC, +0.62% and JPMorgan Chase JPM, +0.86% extended their gains after the Wall Street Journal reported the Fed is expected to soon let healthy banks with robust capital levels increase dividend payments.

The S&P 500 Index SPX, +0.67% added 23.1 points, or 1.9%, to 1,221.06, with financials the best performer among its 10 industry groups.

The Nasdaq Composite COMP, +1.03% rose 37.07 points, or 1.5%, to 2,577.34

For every stock on the decline, more than five gained on the New York Stock Exchange, where volume neared 1.4 billion.

The dollar fell against other world currencies, with the dollar index DXY, -0.16% off 0.6% to 75.85.

“ ‘Quantative easing is the government’s latest faith-based initiative.’ ” — — Jack Ablin, Harris Private Bank

The greenback’s drop helped spur buying of dollar-denominated assets such as equities and commodities, with gold futures rallying and crude-oil futures topping $86 a barrel on the New York Mercantile Exchange.

Fed factor

“We’ve been calling inflation an eventuality, although we’re also saying that quantitative easing is the government’s latest faith-based initiative, said Ablin.

The Fed’s plan to buy $600 billion in bonds in an effort to drive down interest rates and induce more lending helped bolster optimism that the global economy would not worsen and corporate profits would increase. Read more about the Fed’s plans.

In an editorial in Thursday’s Washington Post, Fed Chairman Ben Bernanke defended the central bank’s decision and reiterated that the Fed can’t on its own resolve all of the country’s economic troubles, saying efforts are also needed by other entities, including Congress and regulators.

“Bernanke is once again waving his arms in the air saying ‘hey guys! How about some help over here?’ Unfortunately, nobody in Congress seems to be listening,” wrote Dan Greenhaus, chief economic strategist at Miller Tabak.

The yield on the 5-year Treasury note fell to a record low after the Fed announcement Wednesday afternoon.

“It was clear that the Fed wanted to exceed expectations so we would not sell the fact and take away some of the inflationary expectations they had build into this market,” noted Phil Flynn, an analyst at PFG Best.

Costco Wholesale Corp. COST, +0.36% and Limited Brands Inc. LTD, +8.19% were among the retailers reporting upbeat sales results Thursday, with shares of both rising after they topped Wall Street’s expectations. Read more about retail sales.

After two consecutive weeks of declines, the government reported a steep rise in those filing for unemployment benefits, up by 20,000 last week to 457,000. The weekly data come one day before the Labor Department’s scheduled release of its October jobs report. Read more about jobless claims.

A separate report Thursday had U.S. labor productivity rising 1.9% in the third quarter after dropping in the prior three-month period. Read more about productivity data.