Dow Soars More Than 900 Points

October 14, 2008 at 5:14 am Leave a comment

Stocks enjoyed a much-needed rally Monday with
the Dow Jones Industrials Average soaring more than 900 points on
optimism governments around the world can stabilize the financial
system. The index rose 936 points or 11 percent to 9,387.


The Dow, Nasdaq composite index and Standard
& Poor’s 500 indexes all soared more than 11 percent as investors
hoped the many efforts by central banks to strengthen banks would begin
to kick in. The rally in U.S. stocks snapped an eight-day sell-off and
comes after strong showings in Asian and European markets as investors
applauded the move toward a global coordinated response to the
financial crisis.

The rally also comes just as investors’ nerves
were seriously worn down by what had been the worst week for stocks in
history. Last week, the Dow fell 1874 points, or 18.2 percent, the
deepest loss in a one-week period in history.

Much of the rally came from strength in the financial and materials stocks.

At the closing bell, the Dow Jones industrial
average rose 936.42, or 11.08 percent, to 9,387.61. It was the Dow’s
largest-ever point gain ever.

The previous record occurred March 16, 2000,
during the waning days of the dot-com boom, when the blue chips closed
up 499.19, or 4.93 percent.

Broader stock indicators also jumped Monday. The
Standard & Poor’s 500 index advanced 105.07, or 11.68 percent, to
1,004.29, and the Nasdaq composite index rose 194.74, or 11.81 percent
to 1,844.25.

About 2,900 stocks advanced on the New York
Stock Exchange, while about 250 declined. But the trading volume of
1.22 billion shares was lighter than it had been last week, suggesting
there was less conviction in the buying than during last week’s selling.

Governments around the world have been taking
unprecedented steps to calm investors and coax banks to lend. Late
Friday, Treasury Secretary Henry Paulson announced plans for the U.S.
government to inject capital into banks in exchange for partial
ownership.

Officials from the Treasury Department and the
Federal Reserve announced plans to meet later Monday with top
executives from financial firms to work out details of the $700 billion
plan aimed at thawing frozen bank lending that is stifling the economy.

President Bush acknowledged Monday that “people
all over the world are understandably concerned” but said the United
States and other nations are taking “responsible, decisive action” to
rescue the global economy.

He said the United States will help banks gain access to capital and unfreeze credit markets.

“These are tough times for our economies,” Bush
said after meeting with visiting Italian Premier Silvio Berlusconi.
“Yet we can be confident that we can work our way through these
challenges.”

While the bond market is closed for Columbus
Day, LIBOR rates set in London this morning for 3-month interbank loans
improved a bit, with the rate falling 0.07 percentage points.

Traders say the markets were overdue for a
bounce, considering the Dow had fallen 40.3 percent from its record
close last year on Oct. 9. “Right now it’s a nice bounceback rally,”
says Todd Leone, trader at Cowen & Co. “Everyone is crossing their
fingers hoping it will last.”

Source: USAToday

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