Wednesday, March 11, 2009
NEW YORK, March 10 -- Wall Street snapped out of its gloom Tuesday and posted its best performance of the year, finding a glimmer of optimism in the most unlikely of places: Citigroup is actually managing to turn a profit.
The Dow Jones industrial average rose 379.44, or 5.8 percent, to 6926.49, its highest close since late February. All 30 of the Dow industrial stocks gained ground. Broader market indicators also posted sharp gains. The Standard & Poor's 500-stock index rose 43.07, or 6.4 percent, to 719.60, while the Nasdaq composite index rose 89.64, or 7.1 percent, to 1358.28.
Banking stocks led the markets higher all day. Citigroup chief executive Vikram Pandit wrote in a letter to employees that the bank had operated at a profit for the first two months of this year and was on track, based on historical trends, to earn $8.3 billion for the quarter.
The news broke a months-long torrent of bad news from the banking industry -- particularly for Citi, which had grown so shaky the federal government agreed to take a 36 percent ownership stake. Shares of Citi rose 40 cents, or 38.1 percent, to $1.45. Last week, its stock fell as low as 97 cents.
Investors were further encouraged by Federal Reserve Chairman Ben S. Bernanke's call for a revamp of the country's financial regulatory system.
Shares of General Electric rose $1.46, or 19.7 percent, to $8.87. The company has a big financial services division, so it tends to move with banking stocks.
The Dow Jones Wilshire 5000 index, which reflects nearly all stocks traded in America, jumped 6.5 percent. That gave stocks a gain on paper of $500 billion.
Overseas, Britain's FTSE 100 rose 4.9 percent, Germany's DAX index jumped 5.3 percent and France's CAC 40 gained 5.7 percent.
However, analysts were quick to warn that it could be little more than a one-day pop. Benjamin C. Halliburton, chief investment officer of Tradition Capital Management in Summit, N.J., dismissed the surge as likely little more than a bear market rally that quickly evaporates.
Wall Street has already seen a few false starts. From late November until the start of this year, the Dow and the S&P 500 jumped about 20 percent before plumbing fresh lows this month. The slide has been punishing but it is still well short of the plunge seen in stocks from 1929 to 32.
"I would be surprised to see us trade back over 800 in the near term," Halliburton said, referring to the S&P 500. "The news coming out on the economic front will continue to be rather gloomy."