NEW YORK, Oct. 13, 2008
Record Surge Gives Wall St. A Boost
Dow Soars More Than 900 Points As Governments Pledge Aid For Global Banking System
-
-
Specialist Glenn Carell watches the numbers as he works on the floor of the New York Stock Exchange, Monday Oct. 13, 2008. (AP Photo/Richard Drew)
-
The stock market appeared to jumpstart when the Bush administration said it was moving quickly to implement its $700 billion rescue program. (AP Photo/Richard Drew)
-
-
Play CBS Video Video End Of The Losing Streak Coming back after its worst week in history, Wall Street rallied and soared more than 900 points. Anthony Mason has more on the dramatic rebound.
-
Video Save Our Sinking Banks! The Treasury Department is set to buy stakes in many U.S. banks in an effort to help thaw out the credit freeze. Thalia Assuras reports.
-
Video Global Financial Rescue European leaders are banking on a plan to give a boost to struggling financial institutions on a global scale. Elizabeth Palmer reports.
-
Section Weathering The Downturn In this economy, it's smart to save. CBS News shows you how.
-
Timeline Financial Meltdown Track major events that lead to one of the most tumultuous times in Wall Street's history.
While no one was saying the worst was over for the staggering financial system or troubled economy, buyers returned to the stock market with gusto, with some saying stocks had been driven down to fire-sale prices.
The surge came as executives from leading banks were summoned by the Bush administration to Washington to work out a plan to get loans, the lifeblood of the economy, moving again. And it followed signals that European governments would put nearly $2 trillion on the line to protect their own banks.
The Dow gained more than 11 percent. It was the biggest single daily percentage gain in 75 years - although the Dow is still down 13 percent this month, reports CBS News correspondent Anthony Mason.
By points it shattered the previous record for a one-day gain of 499, during the waning days of the technology boom in 2000.
"My screen is completely green, and I love that," said John Lynch, chief market analyst for Evergreen Investments in Charlotte, N.C. "But I'm not doing any backflips yet. We still have many challenges up ahead."
Stocks opened sharply higher and never looked back. The Dow was up more than 400 points in the opening minutes of trading, and by lunch hour had crossed back through the same 9,000 level it crashed below last week.
The rally intensified in the final hour of trading. In the moments before the closing bell rang, boisterous traders sounded horns on the floor of the New York Stock Exchange, and raucous applause broke out.
"I would say this is closer to the bottom. I can't say this is the bottom," said Bill Schultz, chief investment officer at McQueen, Ball & Associates in Bethlehem, Pa. "I think it's more relief, the rally today."
For Wall Street, it came not a moment too soon. The dismal week before wiped out about $2.4 trillion in shareholder wealth. The eight-day losing streak drained 2,400 points from the Dow, or 22 percent - roughly equal to the 1987 crash and enough to establish a bear market all on its own.
U.S. stock market paper gains totaled $1.2 trillion Monday, according to the Dow Jones Wilshire 5000 Composite Index, which represents nearly all stocks traded in America.
The massive rebound also pushed the Nasdaq composite index higher by 195 points, or nearly 12 percent, its second-biggest gain in percentage terms. The Standard and Poor's 500, rose 104 points, its biggest point gain ever and an 11.5 percent gain, its greatest since 1933.
About 3,030 stocks advanced on the New York Stock Exchange, while only about 160 declined - a reversal from last week, when declining stocks overwhelmed the gainers. But the trading volume of 1.82 billion shares was lighter than it had been last week, suggesting there was less conviction in the buying than during last week's selling.
At the close, the Dow stood at 9,387.61. That's still a far cry from its peak of 14,165, set a little more than a year ago - and history suggests Wall Street could have a long climb back to the top of the mountain.
After the Black Monday crash of October 1987, it took the Dow until August 1989 to set a new all-time closing high, almost two years after its previous peak. The 1987 crash took stocks down 36 percent from their pick - comparable to the 40 percent decline in this round of turmoil.
The Bush administration said it was moving quickly to implement its financial rescue package, including consulting with law firms about the mechanics of buying ownership shares in a broad number of banks to help get lending going again.
The $700 billion package, approved by Congress this month, already gives Treasury Secretary Paulson the authority to buy bank stock, which can be done in days - far more quickly than buying up the bank's toxic mortgage loans, which will take weeks, reports Mason.
Neel Kashkari, the assistant Treasury secretary in charge of the program, said Monday officials were also developing guidelines to govern the purchase of soured mortgage-related assets. He gave few details about how the program will actually buy bad assets and bank stock.
And Wall Street still has a lot to worry about, including a housing market that is still groping for a low point in prices and shoppers who are spooked by job losses and other ominous economic signs and are cutting back on their spending.
"I think we had enough negatives last week that if the government steps in we could have a pretty nice run," said Denis Amato, chief investment officer at Ancora Advisors. "Is it off to the races? No, I don't think so. We have a lot of stuff to work through."
It was also too soon to say for sure whether lending was finally loosening up. The sell-off on Wall Street last week was driven by fear that mistrustful banks were choking off the everyday loans that businesses use to buy supplies and pay their workers.
Monday was the Columbus Day holiday, and the U.S. bond markets and banks were closed, making it difficult to gauge the reaction of the credit markets to the measures taken by world governments.
The Bank of England said it would use up to $63 billion to help the three largest British banks strengthen their balance sheets. The Bank of England, the European Central Bank and the Swiss National Bank also jointly announced plans to work together to provide as much short-term money as necessary to help revive lending.
The heads of the five biggest U.S. banks - Goldman Sachs, Morgan Stanley, Citigroup, JPMorgan Chase and Bank of America - were meeting at the Treasury Department with officials from Treasury and the Federal Reserve. The discussions are aimed at finalizing details on the rescue package Congress passed Oct. 3.
That package started with the idea that the government would buy the bad mortgage-related debt off the books of banks. It now includes provisions for the government to buy ownership stakes in banks, among other steps.
It is coming together against the backdrop of a presidential election that has focused squarely on the economy. Sens. Barack Obama and John McCain are to meet for a final debate Wednesday night on Long Island, with the state of the nation's finances sure to be at the top of the list.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
- 1
- 2
- 3
- 4
... - 8
- next
See all 153 Commentsin 1999.
FOR IMMEDIATE RELEASE: CONTACT: CHRISTI HARLAN
Friday, November 12, 1999 202-224-0894
GRAMM''S STATEMENT AT SIGNING CEREMONY
FOR GRAMM-LEACH-BLILEY ACT
"In the 1930s, at the trough of the Depression, when Glass-Steagall became law, it was believed that government was the answer. It was believed that stability and growth came from government overriding the functioning of free markets.
"We are here today to repeal Glass-Steagall because we have learned that government is not the answer. We have learned that freedom and competition are the answers. We have learned that we promote economic growth and we promote stability by having competition and freedom.
"I am proud to be here because this is an important bill; it is a deregulatory bill. I believe that that is the wave of the future, and I am awfully proud to have been a part of making it a reality."
CSPAN has the debate archived. Senator Byron Dorgan
was a lone voice in opposition and made some chilling
predictions about what would happen if the bill passed.
http://www.c-spanarchives.org/congress/?q=node/77531&id=8716772
Posted by tannerbird at 03:21 AM : Oct 14, 2008
BTW, let''s not forget our earlier discussion. YOU GAVE your money to the "crooks" when you BOUGHT the stocks.
Now you''re watching in dismay to see that you might not be able to sell it to SOMEONE ELSE for the same price YOU PAID for it.
You ALREADY gave up your money. Now you''re upset because you might not GET IT BACK.
This is Mr. Risk knocking on your door and saying "Hello."
Posted by tannerbird at 03:21 AM : Oct 14, 2008
Well, the Democrats have been trying to do that for years.
Now it seems like EVERYBODY is a Democrat.
The times, they are a-changin''...
I heard or read somewhere that the Europeans have already injected money straight into the system, but somethings taking a lot longer over here, is that true?
Like so the new Paulson plan is to buy up shares with sort of the unspoken agreement to banks that the money they get in return they needed to start lending ASAP - but do we know how fast that was supposed to happen?
I''m not getting a read of whether there''s sort of a market expectation that they need to be seeing results of the credit market starting to thaw sometime tomorrow tomorrow - and is it even realistic for us to be expecting to see? Or does the market feel like some patience may be needed because they''re more optimistic?
Is the information out there on when we''re supposed to be seeing the thawing of credit, or is Paulson being vague about that? And is it intentional, like maybe he''s dragging his heels because he really just can''t bring himself to do it or something?
Such a gamble . . . like the market jumping up 9% sounds so great, but it could totally change on a dime too if there''s imperfect information too, right? Still pretty scary since it''s only been like one trading day since those horrific sell-offs - you just don''t know how people are going to react :(
Until some miserly Americans start digging into their over loaded bank accounts and start spending money our recession will continue indefinitely.
-------------------------------------------------------
My Response:
melpol1 has obviously not learnt anything from the last few months of chaos. It isn''t the savers that have caused it, it''s profligate consumer spending on borrowed money that is the root cause of the present situation. "Never a borrower nor a lender be"
Posted by jydavis1 at 11:40 PM : Oct 13, 2008
The true speculative spirit of a Bull market, Go USA.
Excellent!! Now then, those CEOs and other corporate VPs should get a large salary increase plus bonus for doing such a great job under dire circumstances. They improved company earnings so that their stock would see greater capital appreciation. REALLY?
The good news is that "financial bullet" has been successfully extracted from the market and the wound is getting sewn up.
I really feel good about this, don''t you?
The republiCONS set this up really well...
Just in time for McBush to exit, we all get fleeced big time.
McBush/McPalin will continue this crime.
We need to get the republiCONS out of office before we all go to the poor house with our kids...
I still can''t believe there are no criminal charges filed...I think they call this robbery!!!
Do they know something about a drawdown in discretionary spending by the American consumer for things like movies that I don''t?
lolll...(I think)
To Advertise For People Who Have Been Censored By
Brian Ross and ABC News.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
I would not ask the Civil Libs union to wipe the sweat of my b***!!
I can see why your kind was censored/defrocked, your a blight on our country.
You spew hate and discount in the name of freedom and give a bad name to Americans.
Craw back in the dark slimy place you came from jerk.
- 1
- 2
- 3
- 4
... - 8
- next
See all 153 Comments