Wall Street soars nearly 1,000
NEW YORK Wall Street stormed back from last week’s devastating losses today, sending the Dow Jones industrials soaring a nearly inconceivable 936 points after major governments’ plans to support the global banking system reassured distraught investors. All the major indexes rose more than 11 percent.The market was likely to rebound after eight days of precipitous losses that took the Dow down nearly 2,400 points, but no one expected this kind of advance, which saw the Dow by far outstrip its previous record for a one-day point gain, 499.19, set during the waning days of the dot-com boom.Still, while the magnitude of today’s gains stunned investors and analysts, no one was ready to say Wall Street had reached a bottom. The market is likely to have back-and-forth trading in the coming days and weeks and may well see a pullback when trading resumes Tuesday as investors work through their concerns about the banking sector, the stagnant credit markets and the overall economy.John Lynch, chief market analyst for Evergreen Investments in Charlotte, N.C., said today’s rally was encouraging but he doubted it signaled the worst has passed.”My screen in completely green and I love that, but I’m not doing any backflips yet. We still have many challenges up ahead,” Lynch said, noting the ongoing strains in credit markets and forecasts for poor corporate earnings for 2009.Denis Amato, chief investment officer at Ancora Advisors, said it’s too soon to say whether the market has started to carve out a bottom and that the credit markets where many companies turn for day-to-day loans will need to loosen for stocks to hold their gains. With the U.S. bond markets and banks closed today for Columbus Day, it was difficult for investors to gauge the reaction of the credit markets to actions by major governments.He said the severity of the selling last week was one possible signal that the market might be nearing a bottom and that the stepped up intervention of the government is a welcome sign for the markets.”I think we had enough negatives last week that if the government steps in we could have a pretty nice run. Is it off to the races? No, I don’t think so. We have a lot of stuff to work through.”The market did appear to take heart when the Bush administration said it is moving quickly to implement its $700 billion rescue program, including consulting with law firms about the mechanics of buying ownership shares in a broad number of banks to help revive the stagnant credit markets and in turn get the economy moving again.Neel Kashkari, the assistant Treasury secretary who is interim head of the program, said in a speech today officials were also developing guidelines to govern the purchase of soured mortgage-related assets. However, he gave few details about how the program will actually buy bad assets and bank stock.A relatively tame finish to Friday’s session and a weekend off gave analysts and investors some time to reassess last week’s tumultuous trading. And stock prices that were decimated by frenetic selling are now looking attractive.Jim King, chief investment officer at National Penn Investors Trust Co., said the fear that took hold of the markets last week was overwrought and could signal that a bottom is near. When selling turns so frenetic that it hits a broad swath of stocks indiscriminately, as it did last week, many market watchers say a market low is at hand. That creates opporunity, King noted.”We have exceptional companies at fire sale prices,” he said.Still, King cautioned that any market rebound likely will be choppy.”Even if this is the beginning of a recovery we’re not just going to have up markets from here on in,” he said. “We’re not through the woods. We think there is collateral damage from this debacle.”King pointed to an increase in unemployment and nervousness among consumers that could, for example, hurt retailers and in turn, take stocks lower.According to preliminary calculations, the Dow Jones industrial average rose 936.42, or 11.08 percent, to 9,387.61. It was the Dow’s largest-ever point gain during a session, surpassing the jump of 503.45 points seen on Sept. 30.The Dow’s previous record for a point increase by the time the closing bell sounded occurred March 16, 2000, when the blue chips closed up 499.19, or 4.93 percent.Broader stock indicators also jumped today. The Standard & Poor’s 500 index advanced 104.13, or 11.58 percent, to 1,003.35, and the Nasdaq composite index rose 194.74, or 11.81 percent, to 1,844.25.
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