Details of the government’s plans to clean up the nation’s banks ignited a blazing stock market rally on Monday, lifting Wall Street to its best one-day performance in five months and tempting some investors to imagine what they would not have dared just a few weeks ago – that the worst may finally be over.
The Dow surged nearly 500 points, and the Standard & Poor’s 500-stock index rose more than 7 percent, in what amounted to a rare cheer from Wall Street for the Obama administration and Treasury Secretary Timothy F. Geithner reports the New York Times.
“This is what the markets wanted,” said David Bianco, chief United States equity strategist at UBS.
In the last two weeks, glimmers of hope for a recovery in the financial industry have pushed the Dow up 19 percent and the S.& P. 500 up 21.5 percent from their bear market lows, the steepest such rally in stocks since 1938.
Just last month, major stock markets spiraled to a 12-year low after the administration delivered a rough outline of a public-private partnership to shore up the major banks – with little substance or detail.
But on Monday morning, as the Treasury Department filled in the blanks of a $500 billion to $1 trillion plan to buy up troubled assets, investors started buying early in Europe and did not stop until the closing bell rang on Wall Street. The Dow gained 497.48 points, or 6.84 percent, to close at 7,775.86, while the S.& P. 500 was up 54.38 points, to 822.92. The Nasdaq closed 6.8 percent higher, at 1,555.77.
The rally was cemented by signs of a possible uptick in the housing market. The National Association of Realtors said existing-home sales rose 5.1 percent in February as buyers scooped up foreclosed homes.
Read more here: Banking Plan Propels Wall St. to Best Day in Months