DOW SURGES NEARLY 6%
Artigo no Wall Street Journal, da autoria de Kejal Vyas e 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.
The Dow Jones Industrial Average rose 379.44 points, or 5.8%, to 6926.49, closing at its high for the day and recording its biggest point and percentage gains since late November.
Gains were paced by shares of Citigroup, which jumped 38% after it said it was profitable during the first two months of the year. Citi is generally seen as one of the more troubled lenders, and its upbeat comments sent other banks soaring. J.P. Morgan Chase gained 23% and Bank of America rose 28%. Citi shares still ended at just $1.45 and have fallen 93% over the last six months.
More than nine in every ten stocks on the New York Stock Exchange climbed. All 30 Dow components rose. General Electric climbed 20%, 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 13% each. Both have declined more than 40% so far in 2009 even after Tuesday's surge.
"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. Similar sharp stock-market rallies in September, October and November turned out to be fleeting. The market has still not had two consecutive sessions of gains since Feb. 5 and Feb. 6. And all three major indexes are still more than 50% below their October 2007 peaks.
Short sellers may have rushed in to the market to cover bets on Tuesday as the rally gathered steam. "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.
Is the worst over for the stock market?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.
Stocks rose sharply at the open and never wavered. The rally flushed investors out of safe-haven bets on Treasurys, gold and the dollar. The yield on the 10-year note briefly pushed above 3% while the two-year note's yield topped 1%. Gold futures slid under $900 an ounce.
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 holdings, and investors 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.
Andrew Mayers of LaBranche & Co. works on the floor of the New York Stock Exchange March 10. The market made its first big move upward in weeks.
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 8.6% 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 5.4% 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 8.5%.
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.
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.»
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