NEW YORK, March 12, 2009
Upbeat Wall St. Jumps Back Over 7,000
Dow Closes Up Over 200 Points On Signs Banks May Get Relief, Retail Sales, GE Credit Rating
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Kristian Woppel, right, of Barclays Capital, works on the floor of the New York Stock Exchange, March 12, 2009, in New York. (AP)
The Dow Jones industrials shot up 240 points, bringing its gains over the past three days to 622 points. It was the index's biggest three-day jump since last November.
This week's rally got an extra dose of adrenaline after an accounting board told Congress Thursday it may recommend a let-up in financial reporting rules for troubled banks in three weeks. Upheaval in the banking industry has been dogging the market since 2007, and hope that banks might finally get relief in how they value their bad assets spurred a flurry of buying.
"We might find that the banks are not as bad, or not bad at all, if these assets are marked differently," said Doreen Mogavero, president of the New York floor brokerage Mogavero, Lee & Co.
Better-than-expected retail sales figures also helped stocks, as did positive news from four Dow companies: Bank of America Corp., General Electric Co., General Motors Corp., and Pfizer Inc.
Bank of America's CEO told reporters his bank was profitable in January and February. Citigroup Inc. triggered this week's rally Tuesday with similar remarks.
Meanwhile GE's credit rating was cut by less than expected, GM said it will not need a $2 billion loan it previously requested from the government, and Pfizer reported a successful cancer drug trial.
"How all this turned around in a week, I don't know," said Scott Bleier, president of CreateCapital Advisors. "But it's certainly a better outlook than how it looked two weeks ago."
No one is calling the end to the selling on Wall Street. The economic picture is too uncertain, and much of this week's rally has been driven by technical factors. One of those factors is traders' inclination to buy stock to cover "short" bets, or bets that a stock will fall.
But it's been the most reassuring week in months for the stock market. The Dow Jones Wilshire 5000 index, which reflects nearly all stocks traded in America, has jumped 11.2 percent over the past three sessions. That's a paper gain of $900 billion.
"There's a lot of money on the sidelines, and a lot of people who've been waiting for the turn to come," Mogavero said. "I think that probably, people will want to get some of their money in the market."
The Dow rose 239.66, or 3.5 percent, to 7,170.06. The Standard & Poor's 500 index climbed 29.38, or 4.1 percent, to 750.74. The Nasdaq composite index gained 54.46, or 4 percent, to 1,426.10.
The Russell 2000 index of smaller companies rose 23.82, or 6.5 percent, to 390.12.
After a modest decline Monday and three days of buying, the Dow is up 8.2 percent so far for the week. The S&P 500 index is up 9.9 percent and the Nasdaq is up 10.2 percent.
Advancing stocks outnumbered decliners by more than 10 to 1 on the New York Stock Exchange, where volume came to 1.81 billion shares.
Not all of Thursday's data was positive. The Commerce Department said retail sales dipped by a modest 0.1 percent in February, but the Labor Department reported that first time claims for unemployment benefits rose last week to 654,000 from 639,000 the week before, more than analysts had expected.
Investors are also aware that much of this week's rebound can be attributed to technical factors.
The selloff that hurled the stock market to 12-year lows last week was driven largely by short-selling, when a trader bets on a stock falling by selling borrowed shares. Traders have now been covering those short bets by buying stocks, especially after the Securities and Exchange Commission said it was considering reinstating the "Uptick Rule." The rule, eliminated in 2007, aimed at curbing short-selling by only allowing it when a stock edged higher.
On Thursday investors grew more optimistic about bank stocks after the chairman of the independent Financial Accounting Standards Board told the House Financial Services subcommittee on capital markets that the board "could have the guidance in three weeks" on so-called "mark-to-market" accounting.
Frozen demand in the credit markets has sharply lowered the value of assets having anything to do with real estate or consumer credit — even though most of the loans themselves are still getting paid off. Those lower asset values have translated into huge losses for banks.
Citigroup rose 8.4 percent, Bank of America rose 19 percent, Wells Fargo & Co. rose 17 percent, and JPMorgan Chase & Co. rose 14 percent.
GM rose 17.2 percent to $2.18 after its chief financial officer said it would not need its federal loan for March.
GE rose nearly 13 percent to $9.57 after Standard & Poor's downgraded the conglomerate by one notch from "AAA" due to troubles in GE's lending arm.
Meanwhile, pharmaceutical stocks soared Thursday on more acquisition news and a positive drug trial at Pfizer Inc.
Pfizer said it ended a successful trial of its cancer drug Sutent early after data showed the drug met its goal of slowing the progression of pancreatic cancer. Shares of Pfizer, a Dow component, rose nearly 10 percent to $14.02.
Switzerland's Roche Holding AG agreed to buy the rest of Genentech Inc. for $46.8 billion, while Gilead Sciences Inc. agreed to buy CV Therapeutics Inc. for $1.4 billion. Earlier this week, drugmakers Merck and Schering-Plough agreed to merge in a $41 billion deal.
Government bond prices rose, driving the yield on the 10-year Treasury note down to 2.86 percent from 2.91 percent late Wednesday. The dollar strengthened against other major currencies, gold prices gained, and crude oil surged $4.70 to $47.03 a barrel on the New York Mercantile Exchange.
Overseas markets were mixed. Britain's FTSE 100 rose 0.5 percent, Germany's DAX index rose 1.1 percent, and France's CAC-40 rose 0.8 percent. Japan's Nikkei stock average dropped 2.4 percent, while Hong Kong's Hang Seng index rose 0.6 percent.
© MMIX The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
More From Business
Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
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See all 36 Comments[Posted by bigwhtpony at 5:40 AM : Mar 13, 2009 ]
well if he's just an inelligible muslim terrorist who is also just an empty suit ... why does anyone listen to him?
yea ... he's pretty dumb ... rise from a biracial union ... to a harvard education ... to unseating the presumptive nominee in the dem party ... to the president of the united states.
this happens to all stupid people.
Posted by aheadace at 3:07 PM : Mar 12, 2009
As he should. Urkel and his boy, tax cheat Geithner, have already demonstrated that they don't have a CLUE as to how free enterprise and a capitalist economy works. So much for a left wing Harvard education......and where ever he got his undergrad from.
Also, he just said last week that he 'doesn't pay attention to the daily ups and downs of the market.' So if he's dumb enough to try and take credit for an unexpected upswing, then he should take the blame for opening his Kool toking mouth a driving the market DOWN!
Posted by floydzepp at 2:03 AM : Mar 13, 2009
Of course it is. How do you think the maket functions in the past and now? It's about profit at any stage, has been, will be.
The public need not be fooled, this is faaaaaaaaaaar from over...we've been running a deficit for a really long time now and the gov't debt is climbing. FCS!!! They had to take the debt clock down to add more spaces b/c it ran out of room!!!! Eventually our debt to the FED for printing all of our dollar bills, and to whoever else we give or sell Treasury Notes (hint...China)...will greatly outweight Gov't Anticipated Tax Revenue; if it doesn't already...
With the amount of people losing their jobs and jumping on unemployment (for extended periods now) this is bound to happen...And when that happens we will have no more money to print to bailout the banks or "stimulate" the economy. In fact, our entire nation will be bankrupt
The difference between this crisis and the great depression is that now we have unemployment insurance...people are content with sitting on their behinds and collecting checks for as long as they can...giving them more time to sit on their behinds is not the resolution. During the Depression people worked harder, because not being able to work meant you and your kids weren't going to have money to eat.
The Second difference is that we have a much further drop to make before we reach rock bottom like we did during the Depression (at least marketwise). This is both good and bad...good because we have more time to reach for something to hang on to and climb back up...bad because the fall will hurt much worse if we hit the bottom from this distance...I advise people to start buying canned foods in bulk.
When we lose, somebody else wins. Follow the money and we find the guilty. Madoff is just the tip of the iceberg that's Wall St. today. It's all a Ponzi Sceme... a shell game rigged for the filthy rich who would turn us all into their 'service sector' if they had their way. The flock is being fleeced to this day by the neocon/republican seditionists.
[Posted by scb1111_1 at 2:47 PM : Mar 12, 2009 ]
i predict that everything you post between now and the end of the year will add up to zero as well.
Yup, like it's gonna suddenly make people start paying their mortgages again.
GE only mark 2% of their assets to market and they just got a credit downgrade, plus Europe did away with MTM in late 2007 and look at their banks...down 70-95%.
"We might find that the banks are not as bad, or not bad at all, if these assets are marked differently," said Doreen Mogavero, president of the New York floor brokerage Mogavero, Lee & Co. "
[Posted by ____One_American___ at 1:41 PM : Mar 12, 2009 ]
when it's down it's all his fault ... when it's up it's despite of him?
what a moron ... do you see the aburdity of what you're typing?
take your pick a$$hole ... it's one or the other.
Now, if Obamaton simply stops trash-talking and threatening businesses and the five-percenters, it may go up even more.
Posted by ____One_American___ at 1:41 PM : Mar 12, 2009
You're a sad little troll, aren't you?
The stock market tanks and it's all Obama's fault, the stock market goes up and it's "in spite of Obama".
Get a life, loser.
B-b-but, wait, Mr. Hannity, you told me that it was all Obama's fault (despite the problems starting many months before his election), and he's still president. How is this possible?
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