Rally Ends Four-Week Losing Streak

Sunday, March 15, 2009

U.S. stocks ended a four-week losing streak with the steepest rally since November after the three largest U.S. banks said they've become profitable and General Electric said losing the top credit rating from Standard & Poor's won't hurt business.

Citigroup, Bank of America and J.P. Morgan Chase each surged more than 49 percent, propelling a measure of S&P 500 financial stocks to a record gain. GE increased 36 percent as S&P raised its outlook on the company to "stable." All 27 companies in the S&P 500 Retailing Index climbed following a government report showing U.S. chain-store sales beat estimates last month. Schering-Plough jumped 37 percent as Merck agreed to buy the drugmaker for $41.1 billion.

"It's been a terrific week," said Fritz Meyer, the Denver-based senior market strategist for Invesco Aim. "It would make sense for the market to bottom here and start to rebound as the economic recovery unfolds."

The S&P 500 rallied 11 percent, to 756.55, recovering from the 12-year low of 676.53 reached March 9. The Dow Jones industrial average rose 597.04 points, or 9 percent, to 7223.98. The Nasdaq composite index climbed 11 percent, to 1431.50. The Russell 2000 index of small companies increased 12 percent, to 393.09.

The S&P 500 has risen in only two of 10 weeks this year as falling shares of banks raised concern the government would be forced to nationalize some lenders.

Financial stocks in the index surged 34 percent last week as the chief executives of Citigroup, Bank of America and J.P. Morgan said they made money in January and February.

Citigroup jumped nearly 73 percent, to $1.78. Bank of America rose 83 percent, to $5.76. Each has received $45 billion in federal aid. J.P. Morgan, which took $25 billion from the government, gained 49 percent, to $23.75.

Citigroup is still down 73 percent in 2009, while Bank of America has lost 59 percent and J.P. Morgan has fallen 25 percent.

"This is a bear market rally," David Darst, chief investment strategist at Morgan Stanley Global Wealth Management, said in a Bloomberg Television interview.

The Treasury will auction $30 billion of three-month bills and $29 billion of six-month bills tomorrow. They yielded 0.02 percent and 0.4 percent, respectively, in when-issued trading. One-month bills will be sold Tuesday.

-- Bloomberg News

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