A Third Straight Winning Week for Stocks

Sunday, March 29, 2009

The Standard & Poor's 500-stock index gained for a third week in a row, pushing it toward the biggest monthly advance since 1991, after a government plan to rid banks of toxic assets and improving economic reports ignited a rally.

J.P. Morgan Chase and Bank of America both climbed more than 18 percent, leading a rally among 29 of 30 companies in the Dow Jones industrial average, on speculation that the Treasury plan will entice bids for frozen credit assets. Boeing and General Motors rose as unexpected growth in durable-goods orders and new-home sales increased optimism that the economy is stabilizing.

"People thought this was a pretty decent plan, especially compared to a lot of the other alternatives," said Craig Hodges, a fund manager at Dallas-based Hodges Capital Management. "The market tends to respond when there's less uncertainty, and this cleared up a little bit of the fogginess."

The S&P 500 climbed 6.2 percent last week, to 815.94. Speculation that government efforts to spur lending and end the recession will work has boosted the index 21 percent from a 12-year low on March 9. That's the biggest 14-day rally since 1938, according to data compiled by S&P analyst Howard Silverblatt. A bull market is defined as an advance of 20 percent or more.

The Dow rose 6.8 percent, to 7776.18, last week. The Nasdaq composite index, which gets 51 percent of its value from technology stocks, advanced 6 percent, to 1545.20. The Russell 2000 index of small companies increased 7.2 percent, to 429.00.

The S&P 500 rallied 7.1 percent last Monday, the fourth-biggest daily advance since the 1930s, as Treasury Secretary Timothy F. Geithner proposed financing as much as $1 trillion in purchases of distressed assets by investment funds. The gain contrasted with the reaction to Geithner's initial plan on Feb. 10, which spurred a 4.9 percent drop in the S&P 500, the largest since President Obama took office.

The Treasury's Public-Private Investment Program will use $75 billion to $100 billion from the $700 billion Troubled Assets Relief Program enacted last year, giving the government "purchasing power" of $500 billion. The Treasury said the program may double "over time."

The Treasury will auction $31 billion of three-month bills and $29 billion of six-month bills tomorrow. They yielded 0.18 percent and 0.41 percent, respectively, in when-issued trading. One-month bills will be sold Tuesday.

-- Bloomberg News

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