- The Washington Times - Monday, March 16, 2009

NEW YORK (AP) - Wall Street pushed higher for a fifth straight session Monday as investors continued to snap up hard-hit financial stocks.

Reassuring comments from Federal Reserve Chairman Ben Bernanke and encouraging news from a British bank eased some worries about the overall economy and the prospects for financial companies struggling with bad debt. Stocks mostly rose but pulled well off their highs after jumping last week.

Bernanke said Sunday that the recession would probably end this year if the government’s efforts to revive the banking industry succeed. In an interview with CBS’ “60 Minutes,” Bernanke said fixing the economy will require getting banks to lend more freely and financial markets to work more normally again.

Britain’s Barclays PLC reassured investors after saying it has been performing well in 2009. Last week, both Citigroup and Bank of America Corp., reported that they had made money in January and February. The good news from banks kicked off the market’s turn higher last Tuesday.

“The statements from banks are very encouraging,” said David Kelly, chief market strategist at JPMorgan Funds. “It’s premature to talk about a turn in the economy but the stock market is priced as if the economy isn’t ever going to turn around.”

Investors also found encouragement by promises over the weekend from finance ministers of leading industrialized countries to do more to fight the global recession. The finance officials said they would help banks sweep up toxic assets.

The market’s tone has changed dramatically in the past week as the reports from banks led investors to reconsider their pessimistic bets. “The stock market is extremely cheap if you make any assumptions of a recovery at all,” Kelly said.

Bernanke’s latest comments helped reinforce a shift in sentiment on the Street. Analysts said his assessment of the economy was somewhat more upbeat than last month, when he laid out his expectations before Congress. Stocks bounced higher then, but in subsequent sessions plunged and took the Dow and S&P; 500 to their lowest levels in more than a decade as investors succumbed to pessimism about the economy.

An improved stream of news is giving the market a break from seemingly relentless pressure to sell.

“We’re starting to build a base here,” said Douglas Kreps, a managing director at Fort Pitt Capital Group. He said that each day that goes by without disappointing news can help further strengthen the market.

In late afternoon trading, the Dow rose 59.73, or 0.8 percent, to 7,283.71. The blue chips rose as much as 169 points earlier in the session.

The Standard & Poor’s 500 index rose 5.53, or 0.7 percent, to 762.08, while the tech-heavy Nasdaq composite index fell 15.42, or 1.1 percent, to 1,416.08.

About five stocks rose for every two that fell on the New York Stock Exchange, where volume came to 1.19 billion shares.

Gains on overseas market also fed the advance in the U.S. Japanese financial stocks surged on reports that the government would bolster their capital, while British investors were reassured by the Barclay’s news. Japan’s Nikkei stock average rose 1.8 percent. Britain’s FTSE 100 gained 2.9 percent, Germany’s DAX index rose 2.3 percent, and France’s CAC-40 rose 3.2 percent.

Bank shares gained, pushing the KBW Bank Index, which tracks 24 of the nation’s largest banks, up 3.4 percent to 26.47.

Shares of Citigroup rose 67 cents, or 37.6 percent, to $2.45. Bank of America gained 87 cents, or 15.1 percent, to $6.63. JPMorgan rose 64 cents, or 2.7 percent, to $24.39, while Wells Fargo rose 82 cents, or 5.9 percent, to $14.76.

Chris Johnson, president of Johnson Research Group, noted that some of the market’s gains are coming as investors cover bets they had made that stocks would fall.

So-called short covering occurs when investors who sold borrowed stock on expectations the market would fall are forced to buy shares to repay their debts. Johnson said, though, that short covering is less of a factor now than early last week. The Dow jumped 379 points last Tuesday after Citigroup said it made money in January and February.

Investors shook off weak economic readings. The nation’s industrial output fell for the fourth straight month in February, dropping 1.4 percent to the lowest level in more than 50 years of record keeping.

Momentum from last week’s rally is carrying over to support Monday’s trading.

David Hefty, chief executive of Cornerstone Wealth Management in Auburn, Ind., said the gains are likely to continue into at least Tuesday.

“Investors have a stampede mentality,” he said. “They stampede in and they stampede out.” He added that the current rally is probably not sustainable, and mostly just helping bring the market back to a range near the previous lows seen in November.

Bond prices fell Monday as investors gravitated toward stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.95 percent from 2.90 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.23 percent from 0.20 percent late Friday.

The dollar mostly fell against other major currencies. Gold prices also fell.

Light, sweet crude rose 84 cents to $47.09 per barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies fell 1.68, or 0.4 percent, to 391.41.

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On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

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