Wall Street cheers banks' move

Stocks jump after Fed and other central banks inject cash into markets roiled by financial crisis.

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By Aaron Smith, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- Stocks rallied Thursday morning as investors breathed a sigh of relief that central banks around the world have acted to calm markets shaken by the financial crisis.

The Dow Jones industrial average (INDU) gained 150 points, or 1.4% in the early going. The Standard & Poor's 500 (SPX) index added 1.6% and the Nasdaq composite (COMP) climbed over 2%.

Wall Street is coming off a dismal day in which the Dow Jones industrial average plunged 449 points and closed at its lowest point since November 2005. The S&P 500 and the Nasdaq composite both plummeted nearly 5% and closed at multi-year lows as well.

Early Thursday, the Federal Reserve and other central banks around the world announced that they would inject money into the markets in an effort to calm them. Joining the Fed were the European Central Bank, the Swiss National Bank, the Bank of England, the Bank of Canada and the Bank of Japan.

Also influencing markets, oil prices and weekly jobless claims both increased.

Financial crisis: The move comes in the wake of one of the most severe financial crises in history. So far this week, the Federal Reserve announced a takeover of the troubled insurance American International Group (AIG, Fortune 500) in the form of an $85 billion loan, but didn't step in for Lehman Brothers (LEH, Fortune 500), which filed for bankruptcy. In addition, Bank of America (BAC, Fortune 500) agreed to acquire Merrill Lynch (MER, Fortune 500) for $50 billion.

Those actions have left other banks and investment houses quaking. Morgan Stanley (MS, Fortune 500) and Goldman Sachs (GS, Fortune 500) fell sharply Wednesday, and there was talk after the close of possible merger talks between Morgan Stanley and Wachovia (WB, Fortune 500). (Full story)

There was also talk that troubled savings and loan Washington Mutual (WM, Fortune 500) has put itself up for sale.

Economy: The Labor Department announced 455,000 initial jobless claims for the week ended Sept. 13. This was more than the 440,000 claims that were expected by a consensus of economists surveyed by Briefing.com, and the 445,000 claims filed in the prior week.

At 10 a.m. ET, the Conference Board will announce the leading economic indicators for August, a broad measurement of economic growth or decline. A consensus of economists from Briefing.com expects a decline of 0.2%, compared to the July decline of 0.7%.

At the same time, the Philadelphia Federal Reserve Bank will reveal its regional manufacturing survey for September. Briefing.com's consensus of economists projects a slight improvement to negative 10 from negative 12.7 in August.

Markets, currency, oil: European markets were up, but Asian markets closed down. The U.S. dollar fell versus the euro and the British pound, but rose against the yen. Oil made a comeback, rising $2.41 a barrel to $99.57 and spiking as high as $102.24, as some investors eschewed stocks and dumped their money into commodities. To top of page

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