Markets rally; S&P closes above 700

UPDATED:

Wall Street ignored a grim Federal Reserve survey about the economy and rebounded strongly Wednesday following the release of the Obama administration’s plan to prevent housing foreclosures and reports that China plans to announce a major stimulus package.

The three major indexes each surged more than 2 percent, breaking a losing streak that ran for five trading sessions but coming off their highs for the day that pushed their gains beyond 3 percent. The benchmark Standard & Poor’s 500 climbed above 700 after dropping on Tuesday to its lowest point since 1996.

At the close, the Dow Jones Industrial Average jumped 149.82, or 2.23 percent, to 6,875.84. The tech-heavy Nasdaq soared 32.73, or 2.48 percent, to 1,353.74. The S&P 500 climbed 16.54, or 2.38 percent, to 712.87.

Commodity, energy and high-tech stocks led the way higher, with chip maker Intel Corp. up about 4 percent and Cisco Systems soaring nearly 6 percent. Some bank stocks got hit, with General Electric down 4.5 percent because of its capital arm, Citigroup off 7.3 percent and Wells Fargo down 9.4 percent.

Volume was heavy at 8.8 billion shares, signifying that more investors were going back into the market.

April futures contracts for a barrel of light, sweet crude oil spiked more than 8 percent to close at $45.38 on the New York Mercantile Exchange. Gold fell again, nearing $900 ounce; it reached a high of more $1,000 an ounce last week.

The markets shrugged off a Federal Reserve survey based on information given to its 12 regional banks saying that the recession slumped further in the first two months of the year. But Wall Street knew that, having been in the doldrums because of the crisis in the financial industry and weak corporate earnings.

“National economic conditions deteriorated further,” the survey concluded. “The deterioration was broadbased, with only a few sectors such as basic food production and pharmaceuticals appearing to be exceptions.”

Bank stocks began selling off after opening higher, with Wells Fargo down about 13 percent, JPMorgan Chase off about 7 percent and Citigroup sagging about 3 percent. General Electric, the day’s most active stock, sank about 9 percent.

The Treasury Department released details of the administration’s $75 billion housing plan that first was announced last month, providing instructions to lenders who can help up to 9 million homeowners stay in their houses with refinanced loans structured so that their monthly payments are no more than 31 percent of their monthly gross income.

“It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets,” Treasury Secretary Timothy F. Geithner said in a statement.

The housing crisis, including the increasing number of foreclosures and declining home values, has been one of the key reasons for the worst recession in a generation.

Wall Street also got a boost from hopes that China will announce a major stimulus package that investors view as a possible instrument to help limit the recession plaguing the entire industrialized world.

Hopes for the announcement sent markets from Asia to Europe into positive territory, affecting futures prices on Wall Street that led to the higher opening.

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