AI
Monday, October 13, 2008 7:10:20 PM
10/13/2008 HISTORY BOOK ~ Dow soars 936 in a rally for the ages
Stocks had their best day since the 1930s with the Dow Jones industrials gaining 936 points for the first time ever.
The Dow closed up 11.1% to 9,388 -- its biggest percentage gain since March 15, 1933, when the index gained 15.3%, and its fifth largest percentage gain ever.
The blue-chip index broke its old one-day record gain of 499 points, set on March 16, 2000.
The Standard & Poor's 500 Index was up 104 points, or 11.6%, to 1,003. The point gain was a record; the percentage gain was the largest since 1938.
The Nasdaq Composite Index was up 195 points, or 11.8%, to 1,844. The point gain was its 10th largest and the largest since it jumped 325 points, or 14.2%, on Jan. 3, 2001. The percentage gain was its second-largest after that January 2001 gain. (The Nasdaq was established in 1971.)
_________________________________________
Market Dispatches10/13/2008 6:30 PM ET
The blue chip index has its largest one-day point and percentage gains since 1933. General Motors soars 33% on reports it's been talking merger with Chrysler. A report says the government will buy preferred stock in nine top financial institutions. Mitsubishi UFJ buys a stake in Morgan Stanley.
By Charley Blaine and Elizabeth Strott
Stocks had their best day since the 1930s with the Dow Jones industrials gaining 936 points for the first time ever.
The Dow closed up 11.1% to 9,388 -- its biggest percentage gain since March 15, 1933, when the index gained 15.3%, and its fifth largest percentage gain ever.
The blue-chip index broke its old one-day record gain of 499 points, set on March 16, 2000.
The Standard & Poor's 500 Index was up 104 points, or 11.6%, to 1,003. The point gain was a record; the percentage gain was the largest since 1938.
The Nasdaq Composite Index was up 195 points, or 11.8%, to 1,844. The point gain was its 10th largest and the largest since it jumped 325 points, or 14.2%, on Jan. 3, 2001. The percentage gain was its second-largest after that January 2001 gain. (The Nasdaq was established in 1971.)
The rally came as investors embraced governmental efforts to battle the global credit crisis. Governments appeared poised to take ownership positions in their largest banks. The Wall Street Journal reported late today that the government would buy preferred stock in the nine top financial institutions of the largest banks.
Today's rally was big and broad, with decent volume, especially among Nasdaq stocks. Only one of the 30 Dow stocks was lower: General Electric (GE, news, msgs), down 1.1% to $21.26.
Today's rally was prompted by gains in Asia and Europe and is likely to push those markets higher Tuesday.
The S&P 500's close above 1,000 was a potentially important technical breakthrough, suggesting that the U.S. rally may continue.
But there are enough other problems to assure continued volatility. These include
* Continued stress in housing.
* Weak consumer spending amid a difficult recession.
* Uncertainty over the plans governments around the world have formulated to save their banking systems.
Today's rally was helped in part because banks and the bond market were closed for Columbus Day. (Last week's market losses were driven as much by hedge funds forced to liquidate positions as by economic fundamentals.)
Moreover, history suggests that rallies of today's magnitude don't signal a new uptrend in the market.
At the same time, the third-quarter earnings accelerate this week. Dow components Johnson & Johnson (JNJ, news, msgs) and Intel (INTC, news, msgs) both report, along with beverage-and-snack maker PepsiCo (PEP, news, msgs), railroad CSX Corp. (CSX, news, msgs) and biotech company Genentech (DNA, news, msgs).
A big day was had by nearly all
Nineteen of the 30 stocks had gains of 10% or more, led by General Motors (GM, news, msgs), up 33% to $6.51, Alcoa (AA, news, msgs), up 22.7% to $13.80, and Chevron (CVX, news, msgs), up 21.1% to $70.04, as crude oil close up 4.5% to $81.19.
Technology pushed higher as well. Dow component Microsoft (MSFT, news, msgs) jumped 18.6% to $25.50.Google (GOOG, news, msgs) jumped 14.8% to $381.02, and Apple (AAPL, news, msgs) up 13.9% to $110.26.
A total of 474 S&P 500 stocks were higher. Investment house Morgan Stanley (MS, news, msgs) was the S&P 500 leader, with an 86.6% gain to $18.06 after announcing that Mitsubishi UFJ had completed its deal to buy 21% of Morgan Stanley.
In addition, 99 Nasdaq-100 stocks were higher. The one laggard in the Nasdaq-100: Sears Holdings (SHLD, news, msgs), down 4.3% to $67.87.
Last week was the worst ever for the Dow, which lost 1,874 points, or 18.2%, erasing $612 billion in market capitalization. The index also saw its most volatile day ever, swinging 1,000 points in Friday's session.
The S&P 500 was down 18.2% for the week, its worst since May 21, 1933, and the Nasdaq lost 15.3% in its worst weekly performance since April 10, 2000.
Energy prices -- New York close Mon. Fri. Chg. Month chg. YTD chg.
Crude oil (NYMEX) (per barrel) $81.19 $77.70 $3.49 -19.33% -15.41%
Heating oil (per gallon) $2.3410 $2.2100 $0.1310 -18.22% -11.64%
Natural gas (per million BTU) $6.6880 $6.5350 $0.1530 -10.08% -10.62%
Unleaded gasoline (per gallon) $1.9176 $1.8070 $0.1106 -22.82% -23.01%
Uncle Sam may buy into your bank
The rally was prompted by pledges Sunday and today to inject new capital into banks and financial institutions designed to get lenders to do what they're supposed to do: lend money.
The United Kingdom this morning announced plans to inject up to $65 billion into the Royal Bank of Scotland (RBS, news, msgs) and HBOS, the country's biggest mortgage lender. HBOS also said its merger with Lloyds is still moving forward.
A U.S. plan to inject capital directly into the banking system is expected to be announced Tuesday. In addition to buying into the nine big banks, The Wall Street Journal report said, the Treasury envisions spending up to $250 billion in "potentially thousands of banks."
Today London's FTSE 100 Index was up 8.3%, Germany's DAX 30 Index gained 11.4%, and the broader Dow Jones Stoxx 600 Index rose 9.9%.
The MSCI Asia Pacific Index was up more than 5%, and Hong Kong's Hang Seng Index rose 3.2%. Japan's markets were closed.
"Taken together, the latest moves increase the chances that we will begin to see some relaxation of the intense funding stresses," Goldman Sachs global economists wrote in a note this morning. "Bank solvency risk should decline as the government offers protection."
Meanwhile, the Federal Reserve announced further action to add liquidity to the international banking system.
The Fed -- along with the European Central Bank, the Bank of England and the Swiss National Bank -- removed all limits on the currency-swap arrangements among central banks, to make sure European banks can meet the demand for dollars there.
"Sizes of the reciprocal currency arrangements (swap lines) between the Federal Reserve and the BoE, the ECB, and the SNB will be increased to accommodate whatever quantity of U.S. dollar funding is demanded," a joint statement said.The Bank of Japan said it may introduce similar measures.
"By providing unlimited dollar funds, they are acting on the back of the G7 plan to ensure the system is fully liquidized," Lena Komileva, an economist at Tullett Prebon in London, told Bloomberg. "We're going to see even more liquidity provided, and more aggressive rate cuts are coming."
* Read the Fed's statement
The currency move is the latest in a series of aggressive moves by the Fed, all aimed at containing fears of bank defaults and encouraging banks to lend. Last week, the Fed took historic steps in announcing plans to buy commercial paper directly and joining with other central banks around the globe in a coordinated cut of interest rates.
Morgan Stanley-Mitsubishi deal closes
Morgan Stanley cheered Wall Street today when the investment house announced that it had closed a deal to sell Japan's Mitsubishi UFJ a 21% equity stake.
Worry that the deal might unravel sent the investment bank's shares plunging 60% last week, shrinking its total market value to $10.3 billion on Friday -- not much more than the $9 billion Mitsubishi agreed to pay for one-fifth of the company.
New terms of the deal would guarantee Mitsubishi a 10% dividend on its Morgan Stanley shares.
GM in talks with other automakers
General Motors shares soared on reports of a possible combination with Chrysler, which is mostly owned by private-equity firm Cerberus Capital Management.
GM shares plunged nearly 46% last week amid worry that the company could run out of cash.
* Can GM and Ford survive?
GM's U.S. sales fell by 18% through September and Chrysler's plunged 25%. Problems facing the automakers include high gasoline prices and an extremely tight credit market, which has restricted loans to buyers.
"There's got to be more in it for GM than just Chrysler," Erich Merkle, an auto industry analyst with Crowe Horwath, told The Associated Press. "If you put two auto companies together, both that are losing money, both that are losing market share, you've just got an auto company that's losing market share faster and losing more money."
Earlier reports said GM approached Ford Motor (F, news, msgs) about merging.
Sovereign in talks with Banco Santander
Sovereign Bancorp (SOV, news, msgs), a troubled thrift, this morning confirmed that it was in talks to sell a larger stake of itself to Spain's Banco Santander.
The Spanish bank would likely pay $3.81 per share for Sovereign, its closing price on Friday, according to reports. Sovereign shares fell 3.4% to $3.68.
Banco Santander bought a 24.9% stake in Sovereign three years ago.
Waste Management dumps bid for rival
While Morgan Stanley and Sovereign may be moving forward with deals, Waste Management (WMI, news, msgs) this morning said the "current state of the financial markets" is causing it to withdraw its $6.73 billion bid for rival trash hauler Republic Services (RSG, news, msgs).
Waste Management also said it expects third-quarter profit to be between 62 and 63 cents per share on revenue of $3.53 billion. The Street expects earnings of 61 cents on $3.5 billion in revenue.
Waste Management shares were up 18% to $30.39.
Republic had fought Waste Management's offer and on Sept. 23 said it completed a $1.75 billion revolving credit facility to provide financing for a deal with Allied Waste (AW, news, msgs).
Andy Rosenbaum contributed to this report.
$COMPX 1844.25 200.02 12.16%
$INDU 9387.61 936.42 11.08%
$INX 1003.35 104.13 11.58%
Stocks had their best day since the 1930s with the Dow Jones industrials gaining 936 points for the first time ever.
The Dow closed up 11.1% to 9,388 -- its biggest percentage gain since March 15, 1933, when the index gained 15.3%, and its fifth largest percentage gain ever.
The blue-chip index broke its old one-day record gain of 499 points, set on March 16, 2000.
The Standard & Poor's 500 Index was up 104 points, or 11.6%, to 1,003. The point gain was a record; the percentage gain was the largest since 1938.
The Nasdaq Composite Index was up 195 points, or 11.8%, to 1,844. The point gain was its 10th largest and the largest since it jumped 325 points, or 14.2%, on Jan. 3, 2001. The percentage gain was its second-largest after that January 2001 gain. (The Nasdaq was established in 1971.)
_________________________________________
Market Dispatches10/13/2008 6:30 PM ET
The blue chip index has its largest one-day point and percentage gains since 1933. General Motors soars 33% on reports it's been talking merger with Chrysler. A report says the government will buy preferred stock in nine top financial institutions. Mitsubishi UFJ buys a stake in Morgan Stanley.
By Charley Blaine and Elizabeth Strott
Stocks had their best day since the 1930s with the Dow Jones industrials gaining 936 points for the first time ever.
The Dow closed up 11.1% to 9,388 -- its biggest percentage gain since March 15, 1933, when the index gained 15.3%, and its fifth largest percentage gain ever.
The blue-chip index broke its old one-day record gain of 499 points, set on March 16, 2000.
The Standard & Poor's 500 Index was up 104 points, or 11.6%, to 1,003. The point gain was a record; the percentage gain was the largest since 1938.
The Nasdaq Composite Index was up 195 points, or 11.8%, to 1,844. The point gain was its 10th largest and the largest since it jumped 325 points, or 14.2%, on Jan. 3, 2001. The percentage gain was its second-largest after that January 2001 gain. (The Nasdaq was established in 1971.)
The rally came as investors embraced governmental efforts to battle the global credit crisis. Governments appeared poised to take ownership positions in their largest banks. The Wall Street Journal reported late today that the government would buy preferred stock in the nine top financial institutions of the largest banks.
Today's rally was big and broad, with decent volume, especially among Nasdaq stocks. Only one of the 30 Dow stocks was lower: General Electric (GE, news, msgs), down 1.1% to $21.26.
Today's rally was prompted by gains in Asia and Europe and is likely to push those markets higher Tuesday.
The S&P 500's close above 1,000 was a potentially important technical breakthrough, suggesting that the U.S. rally may continue.
But there are enough other problems to assure continued volatility. These include
* Continued stress in housing.
* Weak consumer spending amid a difficult recession.
* Uncertainty over the plans governments around the world have formulated to save their banking systems.
Today's rally was helped in part because banks and the bond market were closed for Columbus Day. (Last week's market losses were driven as much by hedge funds forced to liquidate positions as by economic fundamentals.)
Moreover, history suggests that rallies of today's magnitude don't signal a new uptrend in the market.
At the same time, the third-quarter earnings accelerate this week. Dow components Johnson & Johnson (JNJ, news, msgs) and Intel (INTC, news, msgs) both report, along with beverage-and-snack maker PepsiCo (PEP, news, msgs), railroad CSX Corp. (CSX, news, msgs) and biotech company Genentech (DNA, news, msgs).
A big day was had by nearly all
Nineteen of the 30 stocks had gains of 10% or more, led by General Motors (GM, news, msgs), up 33% to $6.51, Alcoa (AA, news, msgs), up 22.7% to $13.80, and Chevron (CVX, news, msgs), up 21.1% to $70.04, as crude oil close up 4.5% to $81.19.
Technology pushed higher as well. Dow component Microsoft (MSFT, news, msgs) jumped 18.6% to $25.50.Google (GOOG, news, msgs) jumped 14.8% to $381.02, and Apple (AAPL, news, msgs) up 13.9% to $110.26.
A total of 474 S&P 500 stocks were higher. Investment house Morgan Stanley (MS, news, msgs) was the S&P 500 leader, with an 86.6% gain to $18.06 after announcing that Mitsubishi UFJ had completed its deal to buy 21% of Morgan Stanley.
In addition, 99 Nasdaq-100 stocks were higher. The one laggard in the Nasdaq-100: Sears Holdings (SHLD, news, msgs), down 4.3% to $67.87.
Last week was the worst ever for the Dow, which lost 1,874 points, or 18.2%, erasing $612 billion in market capitalization. The index also saw its most volatile day ever, swinging 1,000 points in Friday's session.
The S&P 500 was down 18.2% for the week, its worst since May 21, 1933, and the Nasdaq lost 15.3% in its worst weekly performance since April 10, 2000.
Energy prices -- New York close Mon. Fri. Chg. Month chg. YTD chg.
Crude oil (NYMEX) (per barrel) $81.19 $77.70 $3.49 -19.33% -15.41%
Heating oil (per gallon) $2.3410 $2.2100 $0.1310 -18.22% -11.64%
Natural gas (per million BTU) $6.6880 $6.5350 $0.1530 -10.08% -10.62%
Unleaded gasoline (per gallon) $1.9176 $1.8070 $0.1106 -22.82% -23.01%
Uncle Sam may buy into your bank
The rally was prompted by pledges Sunday and today to inject new capital into banks and financial institutions designed to get lenders to do what they're supposed to do: lend money.
The United Kingdom this morning announced plans to inject up to $65 billion into the Royal Bank of Scotland (RBS, news, msgs) and HBOS, the country's biggest mortgage lender. HBOS also said its merger with Lloyds is still moving forward.
A U.S. plan to inject capital directly into the banking system is expected to be announced Tuesday. In addition to buying into the nine big banks, The Wall Street Journal report said, the Treasury envisions spending up to $250 billion in "potentially thousands of banks."
Today London's FTSE 100 Index was up 8.3%, Germany's DAX 30 Index gained 11.4%, and the broader Dow Jones Stoxx 600 Index rose 9.9%.
The MSCI Asia Pacific Index was up more than 5%, and Hong Kong's Hang Seng Index rose 3.2%. Japan's markets were closed.
"Taken together, the latest moves increase the chances that we will begin to see some relaxation of the intense funding stresses," Goldman Sachs global economists wrote in a note this morning. "Bank solvency risk should decline as the government offers protection."
Meanwhile, the Federal Reserve announced further action to add liquidity to the international banking system.
The Fed -- along with the European Central Bank, the Bank of England and the Swiss National Bank -- removed all limits on the currency-swap arrangements among central banks, to make sure European banks can meet the demand for dollars there.
"Sizes of the reciprocal currency arrangements (swap lines) between the Federal Reserve and the BoE, the ECB, and the SNB will be increased to accommodate whatever quantity of U.S. dollar funding is demanded," a joint statement said.The Bank of Japan said it may introduce similar measures.
"By providing unlimited dollar funds, they are acting on the back of the G7 plan to ensure the system is fully liquidized," Lena Komileva, an economist at Tullett Prebon in London, told Bloomberg. "We're going to see even more liquidity provided, and more aggressive rate cuts are coming."
* Read the Fed's statement
The currency move is the latest in a series of aggressive moves by the Fed, all aimed at containing fears of bank defaults and encouraging banks to lend. Last week, the Fed took historic steps in announcing plans to buy commercial paper directly and joining with other central banks around the globe in a coordinated cut of interest rates.
Morgan Stanley-Mitsubishi deal closes
Morgan Stanley cheered Wall Street today when the investment house announced that it had closed a deal to sell Japan's Mitsubishi UFJ a 21% equity stake.
Worry that the deal might unravel sent the investment bank's shares plunging 60% last week, shrinking its total market value to $10.3 billion on Friday -- not much more than the $9 billion Mitsubishi agreed to pay for one-fifth of the company.
New terms of the deal would guarantee Mitsubishi a 10% dividend on its Morgan Stanley shares.
GM in talks with other automakers
General Motors shares soared on reports of a possible combination with Chrysler, which is mostly owned by private-equity firm Cerberus Capital Management.
GM shares plunged nearly 46% last week amid worry that the company could run out of cash.
* Can GM and Ford survive?
GM's U.S. sales fell by 18% through September and Chrysler's plunged 25%. Problems facing the automakers include high gasoline prices and an extremely tight credit market, which has restricted loans to buyers.
"There's got to be more in it for GM than just Chrysler," Erich Merkle, an auto industry analyst with Crowe Horwath, told The Associated Press. "If you put two auto companies together, both that are losing money, both that are losing market share, you've just got an auto company that's losing market share faster and losing more money."
Earlier reports said GM approached Ford Motor (F, news, msgs) about merging.
Sovereign in talks with Banco Santander
Sovereign Bancorp (SOV, news, msgs), a troubled thrift, this morning confirmed that it was in talks to sell a larger stake of itself to Spain's Banco Santander.
The Spanish bank would likely pay $3.81 per share for Sovereign, its closing price on Friday, according to reports. Sovereign shares fell 3.4% to $3.68.
Banco Santander bought a 24.9% stake in Sovereign three years ago.
Waste Management dumps bid for rival
While Morgan Stanley and Sovereign may be moving forward with deals, Waste Management (WMI, news, msgs) this morning said the "current state of the financial markets" is causing it to withdraw its $6.73 billion bid for rival trash hauler Republic Services (RSG, news, msgs).
Waste Management also said it expects third-quarter profit to be between 62 and 63 cents per share on revenue of $3.53 billion. The Street expects earnings of 61 cents on $3.5 billion in revenue.
Waste Management shares were up 18% to $30.39.
Republic had fought Waste Management's offer and on Sept. 23 said it completed a $1.75 billion revolving credit facility to provide financing for a deal with Allied Waste (AW, news, msgs).
Andy Rosenbaum contributed to this report.
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