Stocks Soar Most Since November On Toxic Asset Plan, Rise in Home Sales
Tuesday, March 24, 2009
NEW YORK, March 23 -- Wall Street got the news it wanted Monday on the economy's biggest problems -- banks and housing -- and celebrated by sending the Dow Jones industrial average to its biggest point gain since November.
The Dow rose 497.48, or 6.8 percent, to 7775.86, its highest finish since Feb. 13 and its biggest percentage gain since Oct. 28, when it rose 10.9 percent. Broader stock indicators also surged. The Standard & Poor's 500-stock index rose 54.38, or 7.1 percent, to 822.92. The Nasdaq composite index rose 98.50, or 6.8 percent, to 1555.77.
Investors welcomed news of the government's plan to help banks remove bad assets from their books after waiting weeks to hear details of the proposal. Treasury Secretary Timothy F. Geithner had announced an outline of the program last month but provided few specifics about how it would work, leading to a stock plunge that sliced 380 points from the Dow.
On Monday, the Treasury Department said its bad asset cleanup program would tap money from the government's $700 billion financial rescue fund and involve help from the Federal Reserve and the Federal Deposit Insurance Corp. and the participation of private investors.
"The actions that we're getting from a policy standpoint are very helpful in removing the sand from the gears," said Alan Gayle, senior investment strategist at RidgeWorth Capital Management. "That is going to be good for the financials."
Shares of the country's largest banks, which have been pounded in recent weeks over concerns about their ability to weather the crisis, soared on Monday. Citigroup jumped 19.5 percent, and Bank of America added 26 percent. Even banks seen as being on better footing posted big advances. J.P. Morgan Chase rose 25 percent, while Wells Fargo rose 24 percent.
Investors were also encouraged by the rise in existing home sales as first-time buyers pounced on deep discounts of foreclosures and other distressed properties.
Bond prices were mixed as stocks rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.68 percent from 2.64 percent late Friday. The yield on the three-month Treasury bill rose to 0.21 percent from 0.19 percent.
Oil rose $1.73 to settle at $53.80 a barrel, and the dollar was mixed against other major currencies.
Overseas, Britain's FTSE rose 2.9 percent. Germany's DAX index rose 2.7 percent, and France's CAC-40 rose 2.8 percent. Japan's Nikkei rose 3.4 percent.