ElCount
03-10-2009, 02:01 PM
TODAY'S MARKETS MARCH 10, 2009, 1:57 P.M. ET
Stocks Rebound in Broad Jump
Citigroup, GM, GE Power DJIA; S&P, Nasdaq Rise More Than 5%
By KEJAL VYAS and ROB CURRAN
Hope that fortunes may be turning for troubled banks and that regulators are moving aggressively to address disruptions in the markets helped drive a broad stock rally on Tuesday.
At around 1:55 p.m., the Dow Jones Industrial Average was higher by about 305 points, or 4.7%, making its largest intraday percentage gains since Nov. 24, when it was up 6.9% at one stage. The benchmark hasn't been above 7000 since March 2, and has not closed above that level since Feb. 27.
Gains were paced by shares of Citigroup, which jumped 36% after it said it was profitable during the first two months of the year, defying analysts' forecasts of losses. Citi is generally seen as one of the more troubled lenders and its upbeat comments sent other banks soaring. J.P. Morgan Chase jumped more than 19% and Bank of America rose 26%.
More than nine in every ten stocks on the New York Stock Exchange climbed. General Electric jumped 19%, undoing some of the damage from a rout that has pushed its shares down by more than 45% this year. Alcoa and General Motors rose about 12% each. Both have declined more than 40% so far in 2009.
"This kind of broad-based move is encouraging, but the question becomes will it be sustained? At this point, it certainly feels that way," said Gordon Charlop, managing director at Rosenblatt Securities.
Short sellers may also be rushing into the market to cover bets. "On a day like today, when this thing gets some legs, the sellers decide to back off and the shorts start to get nervous, and you find yourself with a big fat move," Mr. Charlop said.
Rep. Barney Frank was reported to have said that the Securities and Exchange Commission may reinstate the uptick rule, which barred investors from betting against stocks that are already falling. The SEC eliminated the rule in July 2007 and some investors have pushed for its return.
If reintroduced, the rule will serve as a stabilizer of the market "because people can't pile on a stock all at once," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. Still, the rule is not going to prevent failing companies from going under, Mr. Rovelli said.
The S&P 500-stock index surged 5.7% as its financial sector gained more than 13%. The Nasdaq Composite Index gained 6.1% as tech stocks snapped back from a sharp selloff on Monday that pushed stock indexes to fresh bear-market lows. Google climbed back above $300, jumping 6.3%.
Federal Reserve Chairman Ben Bernanke said in a speech it was important to address the valuation of illiquid assets. Banks want leeway in accounting for illiquid assets such as mortgage bonds, and investors in banks were encouraged by Mr. Bernanke's statement, though he said that he wouldn't support the suspension of mark-to-market rules.
"Bernanke said the magic words -- that the Fed was considering looking at accounting standards," said Fred Dickson, market strategist at D.A. Davidson.
The Fed chairman also signaled it isn't too early to consider longer-term reforms including putting responsibility for addressing possible systemic risks with one authority, such as the Fed.
"I think the market was waiting for some kind of comprehensive policy statement from the Fed, and this is the closest we've come," Mr. Dickson said.
Shares of United Technologies gained more than 7% after it said it would cut 11,600 jobs globally and spend an extra $600 million for restructuring, bringing to $750 million total restructuring costs for the year.
Rohm & Haas rose 5.2% after reaching a tentative deal to be bought by Dow Chemical for the original price of $15.3 billion in cash, or $78 a share. The two top shareholders in Rohm & Haas put up $3 billion to help close the deal, and Dow's banks agreed looser financing terms. Dow Chemical shares rose 5.6%.
Mr. Charlop noted that seeing a pick up in merger-and-acquisition activity has given some market watchers hope for a recovery but the current bear market is a "new paradigm" and all expectations of a reversion to past patterns have so far been fruitless.
Investors largely abandoned safe-haven assets as they were drawn into stocks. The yield on the benchmark 10-year Treasury note rose to 2.984%. The two-year yield topped 1.03%. Gold futures dropped more than $24 an ounce to slide below $900. The dollar declined against the yen and the euro.
A recovery in financial stocks helped most overseas markets make gains. Hong Kong's Hang Seng Index climbed 3.1% as shares of HSBC Holdings rose 14%. Australia's S&P/ASX 200 ended up 1% after briefly touching its lowest level in five and a half years and South Korea's Kospi Composite Index climbed 1.9%. European markets were aided by gains for Deutsche Bank, Unicredit and Credit Suisse, among other banks. The FTSE 100 rose 5%.
Write to Kejal Vyas at kejal.vyas@dowjones.com and Rob Curran at robert.curran@dowjones.com
http://online.wsj.com/article/SB123668017809981927.html#mod=testMod
Stocks Rebound in Broad Jump
Citigroup, GM, GE Power DJIA; S&P, Nasdaq Rise More Than 5%
By KEJAL VYAS and ROB CURRAN
Hope that fortunes may be turning for troubled banks and that regulators are moving aggressively to address disruptions in the markets helped drive a broad stock rally on Tuesday.
At around 1:55 p.m., the Dow Jones Industrial Average was higher by about 305 points, or 4.7%, making its largest intraday percentage gains since Nov. 24, when it was up 6.9% at one stage. The benchmark hasn't been above 7000 since March 2, and has not closed above that level since Feb. 27.
Gains were paced by shares of Citigroup, which jumped 36% after it said it was profitable during the first two months of the year, defying analysts' forecasts of losses. Citi is generally seen as one of the more troubled lenders and its upbeat comments sent other banks soaring. J.P. Morgan Chase jumped more than 19% and Bank of America rose 26%.
More than nine in every ten stocks on the New York Stock Exchange climbed. General Electric jumped 19%, undoing some of the damage from a rout that has pushed its shares down by more than 45% this year. Alcoa and General Motors rose about 12% each. Both have declined more than 40% so far in 2009.
"This kind of broad-based move is encouraging, but the question becomes will it be sustained? At this point, it certainly feels that way," said Gordon Charlop, managing director at Rosenblatt Securities.
Short sellers may also be rushing into the market to cover bets. "On a day like today, when this thing gets some legs, the sellers decide to back off and the shorts start to get nervous, and you find yourself with a big fat move," Mr. Charlop said.
Rep. Barney Frank was reported to have said that the Securities and Exchange Commission may reinstate the uptick rule, which barred investors from betting against stocks that are already falling. The SEC eliminated the rule in July 2007 and some investors have pushed for its return.
If reintroduced, the rule will serve as a stabilizer of the market "because people can't pile on a stock all at once," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. Still, the rule is not going to prevent failing companies from going under, Mr. Rovelli said.
The S&P 500-stock index surged 5.7% as its financial sector gained more than 13%. The Nasdaq Composite Index gained 6.1% as tech stocks snapped back from a sharp selloff on Monday that pushed stock indexes to fresh bear-market lows. Google climbed back above $300, jumping 6.3%.
Federal Reserve Chairman Ben Bernanke said in a speech it was important to address the valuation of illiquid assets. Banks want leeway in accounting for illiquid assets such as mortgage bonds, and investors in banks were encouraged by Mr. Bernanke's statement, though he said that he wouldn't support the suspension of mark-to-market rules.
"Bernanke said the magic words -- that the Fed was considering looking at accounting standards," said Fred Dickson, market strategist at D.A. Davidson.
The Fed chairman also signaled it isn't too early to consider longer-term reforms including putting responsibility for addressing possible systemic risks with one authority, such as the Fed.
"I think the market was waiting for some kind of comprehensive policy statement from the Fed, and this is the closest we've come," Mr. Dickson said.
Shares of United Technologies gained more than 7% after it said it would cut 11,600 jobs globally and spend an extra $600 million for restructuring, bringing to $750 million total restructuring costs for the year.
Rohm & Haas rose 5.2% after reaching a tentative deal to be bought by Dow Chemical for the original price of $15.3 billion in cash, or $78 a share. The two top shareholders in Rohm & Haas put up $3 billion to help close the deal, and Dow's banks agreed looser financing terms. Dow Chemical shares rose 5.6%.
Mr. Charlop noted that seeing a pick up in merger-and-acquisition activity has given some market watchers hope for a recovery but the current bear market is a "new paradigm" and all expectations of a reversion to past patterns have so far been fruitless.
Investors largely abandoned safe-haven assets as they were drawn into stocks. The yield on the benchmark 10-year Treasury note rose to 2.984%. The two-year yield topped 1.03%. Gold futures dropped more than $24 an ounce to slide below $900. The dollar declined against the yen and the euro.
A recovery in financial stocks helped most overseas markets make gains. Hong Kong's Hang Seng Index climbed 3.1% as shares of HSBC Holdings rose 14%. Australia's S&P/ASX 200 ended up 1% after briefly touching its lowest level in five and a half years and South Korea's Kospi Composite Index climbed 1.9%. European markets were aided by gains for Deutsche Bank, Unicredit and Credit Suisse, among other banks. The FTSE 100 rose 5%.
Write to Kejal Vyas at kejal.vyas@dowjones.com and Rob Curran at robert.curran@dowjones.com
http://online.wsj.com/article/SB123668017809981927.html#mod=testMod