The prospect of cheaper oil and cheaper money helped Wall Street buck the global market trend and post sharp gains Thursday, as a late rally put U.S. stock markets in the black after two days of sharp losses.
Continuing a string of extraordinarily volatile trading days, the Dow Jones index posted an 401-point increase, 4.7 percent, to 8,979, after losing 733 points Wednesday and being down nearly 400 points early in the day. The broader Standard & Poor’s Index was also up 38.59 points, 4.3 percent, to 946.43.
Analysts said the market was buoyed by news that the price of oil had fallen below $70 a barrel for the first time since the summer of 2007 and by a string of new government reports on inflation, industrial production and jobless claims suggesting that another interest rate cut may be in the works.
Battered financial stocks received a boost on hints the government may be ready to aid bond insurers to match the recent rescue effort for commercial banks.
America’s seniors, many of whom have seen their retirement funds plummet in the global crisis, got a bit of good news Thursday as the government announced a 5.8 percent increase in Social Security payments starting in January. The percentage increase, done to offset rising energy and food costs in 2008 after years of low inflation, was more than double the previous increase and the highest bump in payments since 1982.
The typical retiree’s monthly check would rise from $1,090 to $1,153, the government said.
Treasury Secretary Henry M. Paulson Jr. said in a television interview that he was less focused on the stock market gyrations than on the world’s frozen credit market. There were signs the Bush administration’s decision this week to pump $125 billion into nine major U.S. banks had helped, he said.
“You don’t want to react too much to the equity market any single day,” Mr. Paulson said in an interview on Bloomberg Television. “But if you look at the credit spreads, if you look at some of the indicators that I look at every day, there’s no doubt in my mind we’ve done the right things.”
Before U.S. markets rallied, leading Asian and European markets had lost ground against in trading earlier in the day.
The FTSE 100 index of leading British shares closed down 218.20 points, or 5.4 percent, at 3,861.39, while Germany’s DAX was 238.82 points, or 4.9 percent, lower at 4,622.81. The CAC-40 in France was 200.07 points lower, or 5.9 percent, at 3,181.00.
The losses were even worse in Asia, as Tokyo’s benchmark Nikkei 225 stock average slid 906 points, or 9.5 percent, to 8,641. South Korea’s Kospi was down 8.4 percent, Australia’s benchmark was off almost 7 percent and Singapore’s index lost about 6 percent.
New Japanese Prime Minister Taro Aso blamed the market’s slide on what he called the “insufficient” U.S. plan to provide up to $700 billion to rescue Wall Street and get banks lending again.
The White House announced that President Bush would make his first extended public remarks on the new bailout strategy with a speech Friday morning to the U.S. Chamber of Commerce — before the U.S. markets open.
The latest government numbers indicate that the financial crisis had already begun to take its toll on the larger economy. But traders said the bad news came with a silver lining, in that it may give the Federal Reserve leeway to cut interest rates again in a bid to jump-start the economy.
The Labor Department reported that the key inflation indicator, the Consumer Price Index, was flat for September, following up on August’s 0.1 percent decline.View Entire Story
Raised in Northern Virginia, David R. Sands received an undergraduate degree from the University of Virginia and a master’s degree from the Fletcher School of Law and Diplomacy at Tufts University. He worked as a reporter for several Washington-area business publications before joining The Washington Times.
At The Times, Mr. Sands has covered numerous beats, including international trade, banking, politics ...
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