U.S. stocks surged on Thursday, buoyed by the government’s $85 billion bailout of insurance giant American International Group (AIG). The Dow Jones Industrial Average climbed sharply, reflecting renewed investor confidence in the stability of the financial system.

The bailout, designed to prevent AIG from collapsing, was met with cautious optimism on Wall Street. Analysts suggested that the move, while unprecedented, was necessary to avert a potentially catastrophic ripple effect throughout the global economy.

Key factors contributing to the rally included:

• AIG Bailout: The government’s intervention provided a safety net, reassuring investors concerned about systemic risk.
• Reduced Uncertainty: The bailout helped to alleviate some of the uncertainty surrounding the financial sector.
• Bargain Hunting: Some investors saw the pullback earlier in the week as a buying opportunity.

However, some analysts remained cautious, noting that the underlying problems in the housing market and the credit crisis were far from resolved. The long-term impact of the AIG bailout remains to be seen.

Market participants will be closely monitoring economic data and further developments in the financial sector in the coming days.