Markets Rise On Bailout Hopes

Dow Up Nearly 200 Points As Traders Optimistic About Government Plan To Ward Off Financial Crisis

(CBS/ AP)  Financial markets grew more upbeat Thursday as congressional leaders said they had struck an agreement in principle on the government's plan to revive the crippled financial system. The Dow Jones industrial average rose nearly 200 points on optimism about the plan, and demand for short-term, safe-haven assets eased slightly as some investors bet that a deal would help unclog credit markets.

Stock market investors clearly were more upbeat after key lawmakers said they would present the plan to the Bush administration and hoped for a vote by both houses of Congress within days. Still, some resistance remained from House Republicans.

According to congressional aides, the plan would release the money in phases, giving the Bush administration just a fraction of the $700 billion it wanted up front. Under the plan, the Treasury secretary would get $250 billion immediately and could have another $100 billion if he certifies it's needed. The last $350 billion could be blocked by a vote of Congress.

The plan is designed to give lawmakers a stronger hand in controlling the unprecedented rescue plan.

The statements out of Washington came after Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke urged lawmakers Tuesday and Wednesday to quickly sign off on the $700 billion plan, which they contend would help prop up the economy by removing billions of dollars in risky mortgage-related assets from financial firms' balance sheets. Distrust of the financial companies that hold these assets has led to a seizing up of the credit markets, which in turn threatens the overall economy by making it harder and more expensive for businesses and consumers to borrow money.

Bush highlighted what he sees as the urgency in a national address Wednesday night. Still, White House officials have yielded to a key demand by congressional leaders, agreeing to include widely supported limits on pay packages for executives whose companies benefit from any deal. Major elements are still being worked out, including how to phase in the mammoth cost of the package and whether the government will get an ownership stake in troubled companies.

Alan Lancz, director at investment research group LanczGlobal, said stock market investors are encouraged that a financial rescue is looking more likely than it had earlier in the week. He said the move could help unclog credit markets by allowing banks and investors to place values on assets tied to mortgages.

"How do you establish a floor? Well, this is the bazooka. This is how you establish a floor," he said of the plan's goal of buying up the toxic debt.

Still, some investors had their doubts. Demand eased but remained high for the 3-month Treasury bill, considered the safest short-term investment. Its yield rose to 0.72 percent from 0.49 percent late Wednesday. That means investors are still willing to earn the slimmest of returns in exchange for a safe place to put their money. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.86 percent from 3.81 late Wednesday.

In late afternoon trading, the Dow Jones industrial average rose about 197, to 11,022. The Dow fell 563 points, or 4.95 percent, in the first three sessions this week so Thursday's buying didn't come as a surprise.

Broader stock indicators also rose Thursday. The Standard & Poor's 500 index advanced 23 points to 1,209 and the Nasdaq composite index rose nearly 31 points to 2,186.

Volume on the New York Stock Exchange came to 5.7 billion shares.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude for November delivery rose $2.29 to $108.02 on the New York Mercantile Exchange.

To help ease credit market strains, the Federal Reserve early Thursday issued more than $20 billion in collateral such as Treasury bills in exchange for dollars to help meet demand for safe assets.

Meanwhile, disappointing readings on employment, housing and demand for big-ticket manufactured goods, as well as a sobering forecast from General Electric Co., underscored the difficulties facing the economy.

The Labor Department said the number of people seeking unemployment benefits increased by 32,000 to a seasonally adjusted 493,000 last week - the highest level in seven years and well above analysts' expectations of 445,000. Hurricanes Ike and Gustav added about 50,000 new claims in Louisiana and Texas, the department said.

The Commerce Department said sales of new homes fell sharply in August to the slowest pace in 17 years. The average sales price also fell by the largest amount on record. New homes sales dropped by 11.5 percent in August to a seasonally adjusted annual sales rate of 460,000 units, the slowest sales pace since January 1991.

The department also said orders for expensive manufactured goods sank in August by the largest amount in seven months as demand for both airplanes and cars sank. Durable goods orders fell by 4.5 percent last month, far worse than the 1.6 percent decline that economists expected and the biggest drop since a 4.7 percent fall in January.

GE lowered its forecast for third-quarter and full-year earnings, citing unprecedented weakness and volatility in the financial services markets. The stock, which had declined in the early going, rose $1.50, or 6.1 percent, to $26.09 alongside the broader market.

The Russell 2000 index of smaller companies rose 9.81, or 1.41 percent, to 707.58.

Overseas, Japan's Nikkei stock average fell 0.90 percent. Britain's FTSE 100 rose 1.99 percent, Germany's DAX index added 1.99 percent, and France's CAC-40 jumped 2.73 percent.

[nicholasma]

NO! No bailout, I never got the chance to own a 500,000.00 house and bull *** my way to that kind of loan!

Please tell me... 700 b in bad loans this years means what ??? in 4 years their still bad loans !! let then eat there loans. Dot tell me to eat cake!

[praiseallah1]

Don''t Let Bush bailout Wall Street with $700 Billion in Tax Payer money!

Email your States Senators, Congressperson, House Representatives and DEMAND that they vote NO on any Bailout because this money will just be used to pay off Wall Streets debt that they created themselves through their own greed by marketing bundled bad mortgage loans!

We have also sent sorning emails to George Bush, Nancy Pelosi, Harry Reid, Chris Dodd, Barney Frank, McCain, Obama saying we will vote them OUT of Office.

Watch this video which show which lawmakers are responsible for the sub-prime mortgage mess at http://wallstreetmarketnews.blogspot.com/2008/09/who-is-to-blame-for-wall-streets-700.html

[edthelight]

Alan Lancz, director at investment research group LanczGlobal, said stock market investors are encouraged that a financial rescue is looking more likely than it had earlier in the week. He said the move could help unclog credit markets by allowing banks and investors to place values on assets tied to mortgages.

In other words Banks and Investors will buy up the toxic mortgages at pennies on the dollar in anticipation of the BAILOUT and sell it back to the govenment. Paulson will be sure to set the price above the market rate (100-200 increase) making these SOB''s richer at the expense of you and me.

The old English proverb "The Devil takes care of his own" truly applies in this fiasco.

[babooph]

The rich do not want the repo-ed middle class dumps,what can be done now-what a mess!The mexicans went home& do not want them either-the banks only bleed payments -they are not landlords-what a mess!

[birdlikebld]

'' .. after a million years of bailing out drowning rich dressed men, congress decided it was time to bail out a drowning poor naked girl, then they''d had enough and went for another million years of bailing out rich dressed men .. ''

[lewiston14]

Sorry I retract post Stock up almost 200 points. I dont see small print wery well anymore.

[lewiston14]

Who came up with that line. CBS stock report right hand of front page Stock down almost down another 200 points today.

[tpraskac]

Poleeeeze. Market up Market down Market up when it hears good news, Market down when not good news. You guys are a punch of Whimps, Phonies, Wusses, and Geeks. GET A GOD *** LIFE

[staplesla]

This $700 billion dollar bailout is ridiculous and I sincerely hope everyone emails their congressmen immediately to vote no on this measure to come before Congress. We obviously have a market failure and our lack of oversight over the past decade has led us to this dire mess. However, everyone is acting out of panic and not thinking about the long term consequences. This bailout only benefits the institutions that got us here in the first place.

I suggest we let capitalism survive and play itself out. Institutions that engaged in poor or unethical business practices should be left to die. And those who continue to be strong will rise to the top even stronger.

Regardless of whatever happens every American will face a tough time. But I don%u2019t think that printing extra money to cover this bailout, thus increasing inflation is the right idea. Plus our kids and grandchildren will be forced to pay for this. This disastrous measure will only hurt the everyday American, many of whom are just trying to go about their daily lives.

In addition this bailout sends the wrong message to those who flat out don%u2019t deserve to be bailed out. And what is next? The airline, auto, homebuilders, hotel/travel, and restaurant industries. Each could claim they deserve the same due to the slow-down in the economy. When will this stop? This bailout only sets up a slippery-slope for disaster.

Let true capitalism thrive. The general taxpayer doesn%u2019t want this bill passed.

[samthetvcat]

PS I say the pressure on us to buy, buy, buy will be intense because this bailout needs for housing prices specifically to rise for it to become economically viable.

[samthetvcat]

---"Meanwhile, disappointing readings on employment, housing and demand for big-ticket manufactured goods, as well as a sobering forecast from General Electric Co., underscored the difficulties facing the economy."---

All these companies that are supposedly having problems getting credit ''due to the credit crisis'', how much of their troubles are because they''re already carrying high levels of debt?

Didn''t a lot of them take as much advantage of the cheap credit available as much as consumers have?

I would guess that even though we''re already so highly leveraged, the pressure on us to buy, buy, buy on all of us is going to be intense.

If people and companies are still spending beyond their means then another crash after the injection of cash into the system is inevitable if the economy''s not truly growing due to increased demand for US goods and services (from say like emerging markets like China), or due to innovation. We may not have any say over this outrageous bailout, but we can to a certain extent control our spending and savings even when Wall St. and Washington try to tell us that it''s a good time to invest in real estate. In some areas it might be because people are often willing to pay a premium for location in areas that are already fully developed, but it''s not a given!

[noloyalisti]

What do We the People (and taxpayers) get out of it. Did they "cap" the fascist''s compensation at only $100 million dollars.

Time to nationalize the banking, health care and oil industries. Quickly.

[neonink]

Markets Rise On Bailout Hopes


Sure... A heroin addict always gets excited when he sees his next fix.

Our nation has now read Democracy for Dummies.

[gop_will_win]

I am buying overly priced stocks today in hopes of a bailout and because President Bush told me to.

[birdlikebld]

'' .. if they weren''t little kids, they could have *** & newsdesks & stages, if they weren''t little kids they could have markets & moneys, alas they are little kids, raped baked starved slaved tortured mangled little vulnerable liabilitys with no place in real society, that''d be like putting women in the army to watch them converted to husband beatets & child rapists .. it makes more sense to put men in the kitchens, baking the lunches & driving the kids buses all over .. ''

[birdlikebld]

'' .. paid most little kids nothing: they bloomed eternitys of bouquets silly, paid a few little farmet kids next to nothing: they grew enough to feed worlds, gave all to little soldiet kids: they forced retailets & wholesalets to recycle half of food for no one has money; and, baked more trillions dollars war babys than all combined .. said ''we didn''t do it, but we got most that did'' .. ''

'' .. is pretty duh, lil girls & boys that solely hide in woods & beat each other yield a combined / averaged / most folk most time academic score less than those what frolic in meadows dancing dances & singing songs about academic & other self industrys .. so kids can download curriculums & proceed to frolic while beat by under-cover instructots when & where they beat each other .. ''

'' .. don''t dance get well feed world get sick tax world hike naked dance dressed hike dressed dance naked porn songs partyd rallyd round sick beds what swim drift spore bloom weed dragon trail fickl firs aid lunch farm cottage studio trail crossing yseedsberry trail group subsistence farms .. ''

'' .. u pay me $1 of your gift certificates, i''ll maybe loiter 20 mins around your sick beds, i''ll maybe participate or otherwise song dance skit kit and / or bloom, and when i need a bed: it''ll be one yours and when i need some lunch: it''ll be some of yours .. ''

[Gary Kempf]

spaceatoms

You might want to check, I believe some of your atoms are splitting on you.