Opening Bell Report

The markets opened sharply higher with the Dow soaring over 250 points to 11,480 while Nasdaq rose 26 points to 2282.  Over the weekend, U.S. regulators took over troubled mortgage giants Fannie Mae and Freddie Mac.

On the upside

Investors hoped that the government's intervention will restore confidence in the financial services and housing sectors.  Shares of homebuilders Lennar Corp. (NYSE: LEN) and KB Home (NYSE: KBH) rose along with shares of Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC).

The CEO of Washington Mutual (NYSE: WM) was replaced as the troubled savings and loans signed a memorandum of understanding with the Office of Thrift Supervision to work with government regulators.

Shares of Gehl (Nasdaq: GEHL) soared after the construction and farm equipment maker received a $450 million offer from France-based Manitou, its largest shareholder.

On the downside

Shares of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) plummeted after the U.S. Treasury Department seized control of the companies over the weekend.  While the two companies are expected to stay in business, common shareholders have been virtually wiped out by the government's 80% stakes.

Investors worieed that Lehman Brothers (NYSE: LEH) may be unable to find partners to buy its assets or to offer capital to shore up its balance sheet.

Shares of Biodel (Nasdaq: BIOD) lost more than half their value after the drug researcher announced disappointing clinical trial results for its diabetes drug treatment.

In the broad market, advancing issues outpaced decliners by a margin of more than 3 to 1 on the NYSE and by nearly 3 to 1 on Nasdaq.  The Russell 2000 which tracks small cap stocks soared 13 points to 732.