S&P 500, Nasdaq Surge 7%

123jump.com Staff
23 Mar, 2009
New York City

The latest rally on Wall Street was sparked by the U.S. Treasury plan to work with private sector and purchase illiquid and hard to value mortgage-linked debts from banks. Markets in New York surged nearly 7% and in Latin America rallied above 5%. Copper gained and crude oil edged higher.

5:00PM New York, 11:00PM Frankfurt, 8:00AM Sydney[R]– The latest rally on Wall Street was sparked by the U.S. Treasury plan to work with the private sector and purchase illiquid and hard to value mortgage linked debts from banks. Markets in New York surged more than 6% and in Latin America rallied above 5%.[/R]

Global Markets

The stock market in New York closed up in a feverish rally that lifted stocks of financials, insurance, banks and home builders.

The latest rally was prompted by the U.S. Treasury plan to support public-private partnership to purchase illiquid debt from banks under the umbrella of the U.S. government. The move is expected to get rid of bad debts from banks and resume fresh lending to consumers and businesses. The stocks have been rallying for the last two weeks after bank executives stated that the business is stronger than before and Fed propose to make available more than $1 trillion to purchase mortgage securities.

The Dow Jones Index surged 6.8%, broader index S&P 500 index soared 7.1% and tech heavy Nasdaq leapt 6.8%. The small cap index Russell 200 index also surged above 7%. Markets in South America and Mexico closed above 5% and European markets closed up more than 2% while trading in New York was still underway.

The Dow is up 19% from its low on March 9 and Nasdaq and S&P 500 indexes are up 22% and 23% from the date. Gold declined but copper surged in metals trading.

The market is still fighting the skeptics of the Treasury plan to purchase bank debt. The Plan calls for the use of $75 billion from the approved funding by the Congress and attract private investors. The U.S. government will provide additional loan for the approved purchasers between 50% and 100% at a rate available to major banks.

Skeptics worry that what incentives buyers of debt who are likely to be non-bank financing companies and hedge funds have to pay for the assets that are at the priced on the books of the banks. The plan could back fire if private entities will bid far below the loan values on the books.

The plan also assumes that banks will resume lending if the sour assets are removed from the troubled banks balance sheets.

Stocks in UK surged on the optimism that lifted world markets after the U.S. proposed a plan to acquire toxic debt owned by banks. The FTSE index increased nearly 3% on a sharp rise in banking and mining stocks. Vodafone and Telefonica owned O2 are in discussion to share network infrastructure.

Tokyo stocks soared 3.4% after government proposed to invest 3 trillion yen to improve government services and provides better automation and electronic access. Cabinet office reported today in its business outlook survey condition that deteriorated in three months to March.

Stocks in Hong Kong and Shanghai rose on the prediction that the recent government stimulus will add between 1.5% and 1.9% in economic growth. Separately, Hong Kong balance of payment surged in the three months to December on a steady rise in financial inflows. In Hong Kong trading financials fell.

Stocks in India surged on a regional rally in Asia. The U.S. Treasury plan to purchase worthless debts lifted markets in India. Trading turnover on both exchanges surged. Tata Motors advanced 3% after it launched its much anticipated small car Nanao. Ranbaxy Labs surged 11% on approvals from UK.

Australian market averages rose 2.4% as financial stocks increased on the hopes that the U.S. Treasury plan to work with private sector to isolate toxic assets may contain fall in financial markets. The news about another Japan stimulus lifted trading sentiment.

North American Markets

Dow Jones Industrial Average surged 497.48 or 6.8% to a close of 7,775.86, S&P 500 Index soared 54.38 or 7.1% to 822.92, and Nasdaq Composite Index added 98.50 or 6.8% to close at 1,555.77.

Of the stocks in S&P 500 index, 493 increased, 7 declined and none was unchanged.

H&R Block Inc led decliners in the S&P 500 index with a loss of 9.2% followed by losses in Harris Corp with a loss of 8.7%, Dynegy Inc of 2.3%, in Sun Microsystems of 2%, in Autozone Inc of 0.8% and in Philip Morris of 0.6%.

Developers Diversified led gainers in the S&P 500 index with a surge of 35.3% followed by gains in XL Capital Ltd of 34.2%, in Lincoln National Corp of 32.7%, in Janus Capital Group of 29% and in Prologis of 28%.

Prudential Financial, Bank of America, JP Morgan and Wells Fargo & Company surged more than 24%.

South American Markets Indexes

Mexico Bolsa Index increased 983.13 or 5.1% to 20,346.43. Brazil Bovespa Stock Index surged 2,362.14 or 5.89% to 42,438.55.

Argentina soared 5.2%, Chile increased 2.3%, Peru surged 6%.




Europe Markets Review

In London FTSE 100 Index closed higher 109.96 or 2.86% to 3,952.81, in Paris CAC 40 Index increased 78.43 or 2.81% to close at 2,869.57 and in Frankfurt DAX index higher 107.63 or 2.65% to close at 4,176.37. In Zurich trading SMI increased 143.90 or 3.01% to close at 4,931.07.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 269.57 or 3.39% to 8,215.53, Hang Seng index in Hong Kong increased 613.91 or 4.78% closed to 13,447.42, CSI 300 index in China higher 59.56 or 2.50% closed to 2,439.40. ASX 200 index in Australia increased 84.50 or 2.44% closed to 3,550.30. The KL Composite index in Malaysia higher 21.48 or 2.51% closed to 878.30.

The Kospi Index in South Korea increased 28.56 or 2.44% to close at 1,199.50. SET index in Thailand closed higher 8.53 or 1.99% to 438.17 and JSE Index in Indonesia increased 45.76 or 3.36% closed to 1,406.65. The Sensex index in India increased 457.34 or 5.10% closed to 9,424.02.

Commodities, Metals, and Currencies

Crude oil increased $1.78 to close at $53.85 a barrel for a front month contract, natural gas increased 9 cents to $4.32 per mBtu and gasoline futures increased 3.51 cents to close at 149.21 cents per gallon.

Wheat futures closed down 1.0 cents in Chicago trading and closed at $5.4925 a bushel. Sugar decreased 0.13 cents in trading at 13.41 cents a pound. Soybean future closed up 3.50 cent to $9.55 a bushel.

Gold decreased $17.30 in New York trading to close at $938.90 per ounce, silver closed down $0.15 to $13.69 per ounce and copper for the front month delivery increased 6.35 cents to $1.8595 per pound.

Dollar edged lower against euro to $1.3639 and gained against yen to 96.92.

Yields on 10-year U.S. bonds decreased to 2.67% and with 30-year maturities increased to 3.70%.