Stocks rebound

News that the U.S. may take a stake in troubled banks, IBM surprise boost equities.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Aaron Smith, staff writer

NEW YORK ( -- Stocks jumped at the open Thursday, as investors welcomed IBM's earnings report and talk that the government could take a stake in troubled banks, in the latest attempt to stabilize financial markets.

A rally in European markets helped too.

The Dow Jones industrial average (INDU), the Standard & Poor's 500 (SPX) index and the Nasdaq composite (COMP) all gained in the early going.

Markets have gotten hammered this week, with the Dow industrials shedding roughly 1,600 in the past week. And Wednesday wasn't much better. It was another disappointing session despite a half-point rate cut from the Federal Reserve. Stocks were volatile amid market turmoil in Europe and Asia. The Dow ended trading with a slump of 200 points, or 2%, while the Nasdaq dropped nearly 1%.

The Labor Department said initial claims for unemployment fell by 20,000 to 478,000 in the week ended Oct. 4. That's slightly worse than the 475,000 expected by economists surveyed by

Much of what had been pushing markets higher was "the IBM effect and a technical bounce from new lows" in the stock market, said Peter Cardillo, economist for Avalon Partners, before the jobless report came out.

On Wednesday, IBM (IBM, Fortune 500) surprised investors by releasing its quarterly results earlier than expected.

Big Blue reported a 20% jump in third-quarter profit to $2.05 a share, handily topping analyst estimates by 4 cents a share. IBM also reaffirmed its full-year outlook. Shares of IBM rose 3% Thursday morning.

Cardillo also said the markets could also be getting relief from "a new government intervention by taking a stake in some of the banks."

To help bolster the markets, the Bush administration is considering taking ownership stakes in certain U.S. banks, as part of the $700 billion bailout package that was approved last week, according to the Associated Press.

Also, the New York Federal Reserve said late Wednesday that it is lending up to $37.8 billion to AIG, just three weeks after the Fed extended an $85 billion taxpayer-funded credit line to the troubled insurance giant. AIG (AIG, Fortune 500) recently disclosed that it had already taken out $61 billion of the debt.

Meanwhile, credit markets remain tight as lenders stay wary of taking on any unnecessary risk. Libor, the overnight bank lending rate, slipped to the still-high 5.09% from the previous rate of 5.38%, according to data. The 3-month Libor rate rose to 4.75% from 4.52%.

Economy: At 10 a.m. ET, the Census Bureau will report its August sales and inventory statistics for wholesale inventories. Economists surveyed by expect a gain of 0.4%, compared to a gain of 1.4% in July.

Markets, money and oil: The Nikkei closed down about 0.5%, but markets were higher in London, Frankfurt and Paris, rallying after a dismal Wednesday that was trailing the turmoil of the U.S. markets. The U.S. dollar slipped against the euro and the British pound but rose against the yen. The price of oil traded within a narrow range, dropping 32 cents a barrel to $88.63.  To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.