Finance

Finance

US stock indicators surge on governmentâ€™s new plan

24 March 2009 10:48 (UTC +04:00)

Baku. Vahab Rzayev â€“ APA-Economics. US stock indexes surged significantly on March 23. According to APA-Economics, Dow Jones industrial average rose nearly 6.8 percent to 7775.86 points, Standard & Poorâ€™s 500 Index rose 7.1 percent to 822.92 and the Nasdaq composite index rose 6.8 percent, to 1,555.77.
The stock indicators surged after the US governmentâ€™s new plan revealing to save the national banking system. The Treasury Department said its bad asset cleanup program would tap money from the government’s $700 billion financial rescue fund and involve help from the Federal Reserve, the Federal Deposit Insurance Corp. and the participation of private investors. Shares of the country’s largest banks, which have been pounded in recent weeks over concerns about their ability to weather the crisis, soared on Monday. Citigroup Inc. jumped 19.5 percent, and Bank of America Corp. added 26 percent. Even banks seen as being on better footing posted big advances. JPMorgan Chase & Co. rose 25 percent, while Wells Fargo & Co. rose 24 percent.
WTI crude oil futures in New York rose 3.3% or $1.73 to $53.8, their highest level since the end of November. Brent oil futures rose 4.4% or $2.2 to $53.47.

The Dow rose 497.48, or 6.8 percent, to 7,775.86, its highest finish since Feb. 13. It was the biggest point gain for the blue chips since Nov. 13 when they rose 552 points and the biggest percentage gain since Oct. 28. when they rose 10.9 percent. It was the fifth biggest point gain in the Dow’s history.
Broader stock indicators also surged. The Standard & Poor’s 500 index rose 54.38, or 7.1 percent, to 822.92, crossing the psychological milepost of 800. The Nasdaq composite index rose 98.50, or 6.8 percent, to 1,555.77.
The Russell 2000 index of smaller companies rose 33.61, or 8.4 percent, to 433.72.
The Dow Jones Wilshire 5000 index, which reflects nearly all stocks traded in America, jumped 7 percent. That’s a paper gain of about $700 billion.
More than 10 stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.9 billion shares.
The Dow is now up 1,228 points, or 18.8 percent, from March 9, when it finished at its lowest point in nearly 12 years, although it’s still down 1,000 points in 2009. The S&P 500 is up 21.6 percent in that time.
The Dow and the S&P 500 index remain more than 45 percent below their peak in October 2007.
Collapsing home prices and the damage they have caused banks are at the center of the economy’s current problems and are a major focus for the stock market. Banks have sharply curbed lending after becoming weighed down with loans that have gone bad, especially mortgages.
Investors had been largely disappointed in the government’s efforts to date to restore the banks to health, but finally seemed encouraged by the long-awaited announcement of details for the bad loan cleanup plan.
"The actions that we’re getting from a policy standpoint are very helpful in removing the sand from the gears," said Alan Gayle, senior investment strategist at RidgeWorth Investments. "That is going to be good for the financials."
Shares of the country’s largest banks, which have been pounded in recent weeks over concerns about their ability to weather the crisis, soared on Monday. Citigroup Inc. jumped 19.5 percent, and Bank of America Corp. added 26 percent.
Even banks seen as being on better footing posted big advances. JPMorgan Chase & Co. rose 25 percent, while Wells Fargo & Co. rose 24 percent.
Investors welcomed the rise in home sales Monday although the biggest jump in nearly six years came as first-time buyers pounced on deep discounts of foreclosures and other distressed properties. Analysts say it could be a nascent sign of recovery. But only weeks ago traders might have dwelled on the 15.5 percent drop in median prices.
"It’s like putting on a different pair of glasses and you think you saw something different today than you saw yesterday," Dunigan said.