Dow soars over 330 pointsStocks surge, with Dow industrials finishing over 300 points higher, on hopes of more rate cuts by the Fed and help from the financials.Video NEW YORK (CNNMoney.com) -- Stocks rallied for the second straight session Wednesday, with the Dow industrials gaining more than 300 points, on expectations the Federal Reserve will continue its rate cutting campaign and on strength from the embattled financials. The Dow Jones industrial average (Charts) gained 331 points, or nearly 2.6 percent, based on early tallies. The 30-stock index climbed by as much as 366 points during the session. The tech-fueled Nasdaq (Charts) led the advance, however, climbing 3.2 percent, while the broader S&P 500 index (Charts) rose about 2.9 percent. Treasury prices tumbled as a result, falling for a second session. Corresponding yields headed higher, lifting the yield on the 10-year note to 4.02 percent from 3.94 percent late Tuesday. In currency trading, the dollar gained versus the euro and yen. COMEX gold for February delivery tumbled $14 to $807.20 an ounce, falling along with other dollar-traded commodities. Oil prices fell sharply for the second straight day on a smaller-than-expected dip in crude oil and distillate supplies. Light, sweet crude for January delivery tumbled $3.80 to settle at $90.62 a barrel Wednesday on the New York Mercantile Exchange. Here's what was moving before the close: Providing a lift to stock were remarks by the Federal Reserve's No. 2 official, Donald Kohn, who said that current financial conditions could warrant "offsetting" policy moves from the central bank, leaving the door open to more interest rate cuts. He said that the central bank needs to be "nimble" and that it can't risk a threat to the economy just to teach speculators a lesson. Wall Street cheered the news, building on Tuesday's advance, as investors bet that it is more likely now that the central bank will cut interest rates by at least a quarter-point when it meets on Dec. 11. The fed funds rate, a key bank lending rate, stands at 4.5 percent. But helping stocks higher was rabid bargain hunting by investors, just two days after the market fell into the technical definition of a correction - the second time in 2007. Among the biggest gainers were the embattled financials. Shares of Wall Street's biggest banks including Citigroup (Charts, Fortune 500), Goldman Sachs (Charts, Fortune 500), Merrill Lynch (Charts, Fortune 500) and Morgan Stanley (Charts, Fortune 500) were all sharply higher in afternoon trade. The AMEX Securities Broker/Dealer index (Charts) gained nearly 6 percent. "We have gotten to pretty dramatic oversold levels, but that's just part of it," said Michael James, manager of equity trading at Wedbush Morgan. "You have oil down over $6 in two days, gold down $20 in two days...the dollar rally has taken money out of those commodities and is helping U.S. equities." Investors, however, appeared unfazed by flurry of soft economic readings and more troubling news from the financial sector. The Federal Reserve said that the economy grew at a slower pace in the late fall in its Beige Book survey of regional economic conditions, as consumers and businesses felt the squeeze of the housing slump and the credit crisis. Existing new home sales in October fell to an all-time low in October, according to the latest reading from the National Association of Realtors. (Full story). An earlier report showed a bigger-than-expected drop in durable goods orders in October. Meanwhile, Wells Fargo (Charts, Fortune 500) said late Tuesday that it would take a $1.4 billion hit in the fourth quarter for loan losses related to home equity loans. However, shares of the bank were nearly 4 percent higher, perhaps on relief that the hit wasn't bigger. Investors also sent Freddie Mac (Charts, Fortune 500) shares up nearly 14 percent, even after it cut its dividend in half and said it would sell $6 billion of stock to bolster its finances in anticipation of additional losses. The mortgage finance firm last week announced a $2 billion loss. Market breadth was positive. On the New York Stock Exchange, winners beat losers nearly seven to one on volume of 1.52 billion shares. On the Nasdaq, advancers topped decliners by nearly four to one as 2.33 billion shares exchanged hands. |
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