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Wall Street Jumps on Citi Bailout
Stocks soared on Monday, capping the best two-day run since the aftermath of the 1987 stock market crash, as the government's decision to rescue Citigroup spurred an enormous relief rally.
Dow component Citigroup, the second-largest U.S. bank, surged nearly 60% to $5.95 and gave one of the biggest lifts to the Dow as the bailout plan eased jittery investors' concerns regarding the financial sector. Last week, Citigroup's stock tumbled to its lowest level in about 15 years amid uncertainty over the bank's future.
"The markets love a bailout," said Brian Gendreau, investment strategist at ING Investment in New York. "It seems to have instilled a bit of confidence in the sector itself."
Adding to the optimism, President-elect Barack Obama named his team of economic advisors -- viewed as being favorable for Wall Street.
Obama appointed New York Fed President Timothy Geithner as Treasury secretary and Lawrence Summers, who was previously Treasury secretary under President Clinton, as director of the National Economic Council.
The Dow Jones industrial average raced up 396.97 points (4.93%). The S&P 500 jumped 51.78 points (6.47%). The Nasdaq leaped 87.67 points (6.33%).
The Dow has advanced 11.8%, while the S&P gained 13.2% in their best two-day rally since the days following the October 1987 stock market crash.
The government's cash infusion for Citi represented the biggest U.S. bank bailout to date, lifting major financial stocks. JPMorgan Chase rose 21.4%, while Bank of America surged 27.2%. The S&P financial index climbed 18.8% in its best one-day percentage gain ever.
Wall Street briefly pared gains after President-elect Barack Obama named his economic team, as expected, but did not offer any specific dollar figures or other new details on a stimulus plan.
Shares of iPod maker Apple advanced nearly 13% to $92.95 and gave the biggest boost to the Nasdaq 100. Microsoft shot up 5.1% to $20.69.
Campbell Soup, considered a recession-proof play, however, surprised investors with a disappointing full-year profit outlook, citing a stronger U.S. dollar. Campbell Soup's stock slid 7.6% on the NYSE.
Xerox shot up 17.9% to $6.19 after the world's top supplier of digital printer and document management services forecast 2009 profits generally in line with analysts' expectations due to repeat customers and recent cost-cutting measures.
Citigroup's rescue followed the disappearance this year of major Wall Street firms Bear Stearns and Lehman Brothers, as well as the failure of Washington Mutual, the largest U.S. savings and loan.
In addition to the new capital, Washington effectively guaranteed most of Citi's $306 billion in losses on high-risk assets.
A Dow Jones index of U.S. home builders' stocks shot up 16.6% in late Monday afternoon trading.
Volume was active on the NYSE, where about 2.04 billion shares changed hands, above last year's estimated daily average of 1.90 billion. On the Nasdaq, about 2.56 billion shares traded, above last year's daily average of 2.17 billion.
Advancers outnumbered decliners by a ratio of almost 8 to 1 on the NYSE, while on the Nasdaq, about three stocks rose for every one that fell.
Source: Reuters
Wall Street Jumps on Citi Bailout
Stocks soared on Monday, capping the best two-day run since the aftermath of the 1987 stock market crash, as the government's decision to rescue Citigroup spurred an enormous relief rally.
Dow component Citigroup, the second-largest U.S. bank, surged nearly 60% to $5.95 and gave one of the biggest lifts to the Dow as the bailout plan eased jittery investors' concerns regarding the financial sector. Last week, Citigroup's stock tumbled to its lowest level in about 15 years amid uncertainty over the bank's future.
"The markets love a bailout," said Brian Gendreau, investment strategist at ING Investment in New York. "It seems to have instilled a bit of confidence in the sector itself."
Adding to the optimism, President-elect Barack Obama named his team of economic advisors -- viewed as being favorable for Wall Street.
Obama appointed New York Fed President Timothy Geithner as Treasury secretary and Lawrence Summers, who was previously Treasury secretary under President Clinton, as director of the National Economic Council.
The Dow Jones industrial average raced up 396.97 points (4.93%). The S&P 500 jumped 51.78 points (6.47%). The Nasdaq leaped 87.67 points (6.33%).
The Dow has advanced 11.8%, while the S&P gained 13.2% in their best two-day rally since the days following the October 1987 stock market crash.
The government's cash infusion for Citi represented the biggest U.S. bank bailout to date, lifting major financial stocks. JPMorgan Chase rose 21.4%, while Bank of America surged 27.2%. The S&P financial index climbed 18.8% in its best one-day percentage gain ever.
Wall Street briefly pared gains after President-elect Barack Obama named his economic team, as expected, but did not offer any specific dollar figures or other new details on a stimulus plan.
Shares of iPod maker Apple advanced nearly 13% to $92.95 and gave the biggest boost to the Nasdaq 100. Microsoft shot up 5.1% to $20.69.
Campbell Soup, considered a recession-proof play, however, surprised investors with a disappointing full-year profit outlook, citing a stronger U.S. dollar. Campbell Soup's stock slid 7.6% on the NYSE.
Xerox shot up 17.9% to $6.19 after the world's top supplier of digital printer and document management services forecast 2009 profits generally in line with analysts' expectations due to repeat customers and recent cost-cutting measures.
Citigroup's rescue followed the disappearance this year of major Wall Street firms Bear Stearns and Lehman Brothers, as well as the failure of Washington Mutual, the largest U.S. savings and loan.
In addition to the new capital, Washington effectively guaranteed most of Citi's $306 billion in losses on high-risk assets.
A Dow Jones index of U.S. home builders' stocks shot up 16.6% in late Monday afternoon trading.
Volume was active on the NYSE, where about 2.04 billion shares changed hands, above last year's estimated daily average of 1.90 billion. On the Nasdaq, about 2.56 billion shares traded, above last year's daily average of 2.17 billion.
Advancers outnumbered decliners by a ratio of almost 8 to 1 on the NYSE, while on the Nasdaq, about three stocks rose for every one that fell.
Source: Reuters
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