Stocks boosted by bank plan

Investors cheer Geithner's plan to buy up bad assets.

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 staff

What should the government do about AIG bonuses?
  • Tax them
  • Make AIG pay them back
  • Nothing, a contract's a contract

NEW YORK( -- Stocks rallied early Monday as investors welcomed the Treasury's much-anticipated plan to buy up at least $500 billion in bad bank assets, seeing it as a key step in stabilizing the financial sector.

The Dow Jones industrial average (INDU) gained 212 points, or 2.9%, about 40 minutes into the session. The S&P 500 (SPX) index rose 24 points, or 3.2%. The Nasdaq composite (COMP) added 42 points, or 2.9%.

"I think the markets are really embracing this step by Geithner and Obama," said Manus Cranny, market analyst at MF Global Spreads in London. "This really is a precipitous moment for the market."

But Cranny warned that Geithner needed to do a better job at delivering his plan than he has in the past, to avoid spoiling the rally.

"[Geithner's] last delivery was patchy at best, both in terms of style and substance," said Cranny. "He needs to look and sound a lot more confident about what he's tabling to us."

Treasury plan: The U.S. government said late Sunday that it will initially commit up to $100 billion to subsidize private investors' purchase of banks' so-called toxic assets, which have led to the seizure of the credit markets.

"Over time, by providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets," Geithner wrote in an op-ed in the Wall Street Journal.

The aim of the public-private partnerships is to buy up at least $500 billion of bad assets, and possibly up to $1 trillion over time.

Peter Cardillo, chief market economist for Avalon Partners, said that futures are responding positively to the notion that the Obama administration is "being less hostile toward the private sector."

Economy: Sales of existing homes rose 5.1% in February, according to the National Association of Realtors. Sales were expected to slip to an annual rate of 4.45 million for February, according to a consensus of economist opinion from Instead they rose to a seasonally adjusted annual rate of 4.72 million million units, up from a rate of 4.49 million in January. Still, February sales were down nearly 5% from year-ago levels.

Deals: Suncor Energy (SU) agreed to buy rival Petro-Canada (PCZ) for about $14.86 billion. The deal will expand the company's oil sand reserves and create Canada's biggest energy company. Suncor shares were little changed, while Petro shares jumped 20% in early trading.

World markets: Stocks around the world rallied as investors awaited full details of Geithner's plan. Japan's Nikkei gained 3.4% while the Hang Seng in Hong Kong surged 4%. In Europe, the FTSE 100, the CAC-40 in France and German's DAX added at least 1% in midday trading.

Oil and money: Oil rose 51 cents a barrel to $52.58. The dollar dipped versus the euro and the British pound, but rose against the yen. 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
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

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.