Wall Street surged on a burst of optimism Monday, propelling the
Dow Jones industrials up more than 400 points on more signs of a
reviving credit market and comments from Federal Reserve Chairman
Ben Bernanke.
Wall Street surged on a burst of optimism Monday, propelling the Dow Jones industrials up more than 400 points on more signs of a reviving credit market and comments from Federal Reserve Chairman Ben Bernanke.
Investors who had sold furiously in recent weeks in response to immobile credit markets became more optimistic as bank-to-bank lending rates eased further. There’s also less demand for the safest Treasury bills. And Bernanke has hinted that the government will take more steps to help the economy.
The improvement in lending rates helped to temper concerns about tight credit contributing to a prolonged recession, but Bernanke still warned that the economy is likely to be “weak for several quarters, and with some risk of a protracted slowdown.” He told the House Budget Committee that a fresh round of government moves might help ease the country’s economic weakness.
“The market liked what Bernanke had to say, and there were hints that he’s leaving the door open for further moves in terms of rate cuts or economic stimulus,” said Ryan Larson, head of equity trading at Voyageur Asset Management. “And, with credit easing in slow baby steps, the market has started to realize that this is going to be a process.”
Wall Street was also sifting through the first of hundreds of earnings reports expected this week, seeking clues about future business conditions. Among those reporting, oilfield services provider Halliburton Co. topped estimates, and CEO Dave Lesar told investors and analysts in a conference call, “We expect that any major macroeconomic disruptions will ultimately correct themselves.”
Trading was orderly for much of the day, but the final hour again saw frenetic activity, this time to the upside. The market’s tone was clearly better than during the previous two weeks, when investors’ heightened anxiety about credit markets and the economy sent stocks plunging. The relative calm in Friday’s session, when the Dow fell 127, and Monday’s trading, had more investors feeling confident that the worst of the market’s volatility was behind it.
Still, with back-and-forth trading a hallmark during recoveries from plunges in the past, investors were also expecting that Wall Street would be subject to price swings for some time.
According to preliminary calculations, the Dow rose 413.21, or 4.67 percent, to 9,265.43.
Broader indexes also rose sharply. The Standard & Poor’s 500 index jumped 44.85, or 4.77 percent, to 985.40. The Nasdaq composite index rose 58.74, or 3.43 percent, to 1,770.03.
