- The Washington Times - Tuesday, November 25, 2008


The government’s latest bailout of a big financial company - this time, Citigroup Inc. - sent Wall Street soaring Monday for the second straight session as investors bet that the worst of the financial industry’s problems might finally be over. The Dow Jones industrials soared nearly 400 points, while all the major indexes jumped more than 4.5 percent.

The surge gave the market its first two-day advance since the end of October and the Dow its biggest two-day percentage gain since October 1987, the month of the Black Monday crash. The Dow’s 891-point rise over the two sessions also wiped out the 872-point plunge it suffered over the course of Wednesday and Thursday, when investors were anguishing over the fate of Citigroup and financial companies in general, and over the future of the nation’s automakers.

Although investors sensed late last week that a rescue of Citigroup was forthcoming, investors nonetheless were heartened, even emboldened, by the U.S. government’s decision late Sunday to invest $20 billion in Citigroup and guarantee $306 billion in risky assets.

Wall Street’s enthusiasm rose not only because the bailout answered questions about Citigroup but also because many observers saw the move as offering a model for how the government might carry out other bank stabilizations.

“This could be the template for saving the banks,” said Scott Bleier, founder of market advisory service CreateCapital.com.

“The government has taken a new quill out, they’ve gone to where they didn’t go before in terms of trying to secure the system,” Mr. Bleier said. “Some of that vulnerability seems to be gone now.”

Still, the market remains wary, especially with the economy in a serious downturn. The Dow was up more than 500 points in the last hour before giving up some of its gains - many investors wanted to take some money off the table before the next bit of bad news arrives. And the market has frequently done sharp reversals since the start of the credit crisis 15 months ago; its moves over the past four sessions are proof of how fractious trading has become.

The Dow rose 396.97 points, or 4.93 percent, to 8,443.39. It last put together a two-day advance on Oct. 30-31, along with the rest of the market.

Broader stock indicators also jumped. The Standard & Poor’s 500 Index advanced 51.78, or 6.47 percent, to 851.81, and the Nasdaq Composite Index rose 87.67, or 6.33 percent, to 1,472.02.

Over the course of Friday and Monday, the Dow rose 11.8 percent, while the broader S&P 500 index jumped 13.2 percent. The Nasdaq rose 11.9 percent. Paper gains in U.S. stocks over the two sessions came to $1.2 trillion, according to the Dow Jones Wilshire 5000 Composite Index, which reflects nearly all stocks traded in America.

Bond prices were mixed Monday as investors examined the government’s bailout plan for Citigroup. The yield on the benchmark 10-year Treasury note, which moves opposite of its price, rose to 3.36 percent from 3.20 percent late Friday.

The Treasury bill market showed continuing high demand, a sign of investors’ caution. The yield on the three-month T-bill, considered one of the safest investments, fell to 0.02 percent from 0.04 percent late Friday.

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