U.S. Stocks Surge Above 4%

123jump.com Staff
08 Dec, 2008
New York City

U.S. stocks surged on optimism that new administration will provide a large government stimulus to arrest faltering economy. At least today, investors are overlooking forces that will stoke inflation in the years to come. On Sunday, India lowered its lending rates. Oil and metals prices rise.

[R]11:20AM New York – U.S. stocks surged in the morning trading on the optimism of large government stimulus. Automakers bailout agreement is likely to be finalized today.[/R]

U.S. stocks rallied in the morning trading after President-elect Obama reiterated his plan to sharply increase government spending on infrastructure projects. Investors quickly bid up stocks in the morning that current economic weakness can be stalled or contained with the government spending. Government spending may create public sector jobs but the spending is more likely to inflationary and drag dollar lower in the longer term.

Commodities and mining and metals stocks rallied in the morning. Of the stocks in S&P 500 index, 448 stocks increased and 52 dropped. The 35 stocks surged above 10% with Genworth Financial soaring 69% followed by rise in Chesapeake Energy of 32%, in AK Steel Holding of 23%, in Freeport McMoran ((FCX)) of 21% and in Hartford Financial Services and U.S. Steel of 17.5%.

General Motors ((GM)) 65 cents to $4.74 in heavy volume after lawmakers appear to agree on a bailout plan. The rescue plan will offer GM short term loan immediately and provide credit facility for 2009. Ford increased 47 cents to $3.18.

Media reports suggest that the U.S. Congress is likely to release at $25 billion of funds from the Energy bill but the source of the rest of funds is still negotiated. President Bush, Treasury Secretary Paulson and several Republican Senators are still against using TARP funds to bailout auto industry.

However, Paulson credibility is very low after he switched his stance in how TARP funds will be used in assisting banks. Paulson and Fed Chairman Bernanke allotted nearly $85 million over one weekend to AIG without a single condition, Congressional hearing and an oversight board.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 411.54 or 5.20% to 8,329.05, Hang Seng index in Hong Kong increased 1,198.78 or 8.66% closed to 15,044.87 CSI 300 index in China higher 81.86 or 4.07% closed to 2,095.04. ASX 200 index in Australia increased 141.70 or 4.06% to close 3,631.60. Markets of Malaysia were closed today.

The Kospi Index in South Korea increased 76.92 or 7.48% to close at 1,105.05. SET index in Thailand closed higher 17.71 or 4.51% to 410.58. The Sensex index in India increased 197.42 or 2.20% closed to 9,162.62. Markets of Indonesia were closed today.

Europe Markets Review

In London FTSE 100 Index traded higher 171.61 or 4.24% to 4,220.98, in Paris CAC 40 Index increased 185.28 or 6.20% to 3,173.29 and in Frankfurt DAX index traded higher 266.31 or 6.08% to 4,647.78. In Zurich trading SMI increased 227.93 or 4.12% to 5,758.77.