Wednesday, January 23, 2008 8:10:38 PM
Stocks snapped a five-day losing streak oWednesday, with the Dow surging nearly 300 points on optimism that a government plan to rescue ailing bond insurers is taking shape and could prevent billions more in credit losses.
The market also drew support from growing confidence that aggressive interest-rate cuts by the Federal Reserve could help stabilize the economy and support the beleaguered banking sector.
Shares of insurers Ambac Financial Group Inc and MBIA Inc, which backstop many of the riskier bets banks and their customers have made in credit markets, surged 63 percent and nearly 36 percent, respectively.
News of a meeting between New York regulators, bond insurers and their customers lifted the market out of negative territory in late afternoon, pushing the Dow and S&P up more than 2 percent by the close. That marked a sharp turnaround from earlier in the day, when the Dow and the S&P were each down more than 2 percent.
"The speculation that mortgage insurers could potentially get a bailout helped the market stabilize. That was enough to get the market going. There was no real silver bullet news that came through," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
The Dow Jones industrial average rose 298.98 points, or 2.50 percent, to settle at 12,270.17. The Standard & Poor's 500 Index was up 28.10 points, or 2.14 percent, at 1,338.60. The Nasdaq Composite Index was up 24.14 points, or 1.05 percent, at 2,316.41.
Trading was heavy, with volume on the New York Stock Exchange unofficially hitting the second highest on record, the Big Board said.
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