- The Washington Times - Tuesday, March 18, 2008

NEW YORK (AP) — Stocks rallied in early trading today as investors, relieved by better-than-expected results from Lehman Brothers and Goldman Sachs, also anticipated a massive interest rate cut from the Federal Reserve. The Dow Jones industrial average surged more than 200 points.

A rate cut from the Fed in the afternoon would come just two days after the central bank backed JPMorgan’s buy of Bear Stearns Cos., and loosened up its own lending practices.

Though the stock market wants more details about the souring mortgage-related bets on investment banks’ books, its tone Tuesday was significantly more upbeat than it has been in recent days.

Two rivals of Bear Stearns — Lehman Brothers Inc. and Goldman Sachs Group Inc. — both posted quarterly profits that were significantly lower than they were a year ago, but higher than analysts had anticipated.

Investors had sent stocks plunging late last week and yesterday morning, after JPMorgan Chase & Co. said Sunday it was buying Bear Stearns for just $2 a share, or $236 million. Lehman Brothers, being the investment bank most similar in structure and exposure to Bear Stearns, was particularly hard hit yesterday.

But early today, Lehman shares spiked back up 19 percent, while Goldman shares rose 8 percent.

The Dow rose 206.30, or 1.72 percent, to 12,178.55.

Broader stock indicators also surged. The Standard & Poor’s 500 index rose 26.57, or 2.08 percent, to 1,303.17, while the Nasdaq composite index rose 49.28, or 2.19 percent, to 2,226.29.

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