- The Washington Times - Tuesday, October 21, 2008

Wall Street surged higher Monday, with the Dow Jones Industrial Average soaring 413 points after Federal Reserve Chairman Ben S. Bernanke called for a second federal economic stimulus package and the White House voiced support for the idea.

The Dow rose 413.21, or 4.67 percent, to 9,265.43. The rally marked the Dow’s 23rd triple-digit move in 26 sessions.

Broader indexes also rose sharply Monday. The Standard & Poor’s 500 index jumped 44.85, or 4.77 percent, to 985.40. The Nasdaq composite index rose 58.74, or 3.43 percent, to 1,770.03.

Mr. Bernanke told the House Budget Committee Monday morning that with a protracted economic slowdown likely, another economic stimulus package would be “appropriate.” It was the first time the central bank chairman explicitly endorsed a second stimulus package.

White House spokeswoman Dana Perino said the Bush administration was “open” to a stimulus plan.

“The market liked what Bernanke had to say, and there were hints that he’s leaving the door open for further moves in terms of rate cuts or economic stimulus,” said Ryan Larson, head of equity trading at Voyageur Asset Management.

Meanwhile, there were some optimistic data that showed the economy’s health improved for the first time in five months in September as supplier deliveries and new orders strengthened, a private research group said Monday. The New York-based Conference Board said its monthly forecast of future economic activity rose 0.3 percent, a much better reading than the 0.2 percent drop expected by Wall Street economists surveyed by Thomson/IFR.

Still, with back-and-forth trading a hallmark during recoveries from plunges in the past, investors were expecting that Wall Street would be subject to volatile price swings for some time.

“We don’t have any sense if this kind of a run is sustainable,” said Phil Orlando, chief equity market strategist at Federated Investors. “We’re groping quite literally for a bottom right here, but I’m not going to discount that we won’t retest lows over the next couple of weeks.”

The credit markets were gradually responding to the series of bailout measures by governments around the world, including a joint U.S. and European plan to buy stakes in private banks to boost their lending. Demand for Treasury bills, regarded as the safest assets around, lessened Monday but remained relatively high in a sign that there was still much fear in the markets.

The three-month Treasury bill Monday yielded 1.07 percent, up from 0.82 percent late Friday. That’s better than the 0.20 percent of last Wednesday, and the first time it surpassed 1 percent in more than a week.

Investors were also optimistic about the steady decline in interbank lending rates, which fell for a sixth straight day Monday. The London interbank offered rate, or Libor, for three-month dollar loans fell 0.36 percent to 4.06 percent, the biggest daily drop since January.

The benchmark 10-year Treasury note was little changed. The yield, which moves opposite its price, fell to 3.85 percent from 3.93 percent late Friday.

Todd Leone, managing director of equity trading at Cowen & Co., said many investors were feeling optimistic that credit is slowly becoming more available.

“People are just getting comfortable with buying again,” said Mr. Leone. “We still could see another big drop, but those big drops are going to get less and less.”

Advancing issues outpaced decliners by about 5-to-1 on the New York Stock Exchange, where volume was a light 1.23 billion shares.

Financial markets overseas also jumped. Japan’s Nikkei stock average closed up 3.59 percent. Britain’s FTSE 100 rose 5.41 percent, Germany’s DAX index advanced 1.12 percent, and France’s CAC-40 rose 3.56 percent.

David R. Sands contributed to this article, which is based in part on wire-service reports.

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