Stocks Soar as Bernanke Calms Jitters
Investors enjoyed a Fat Tuesday of their own, reclaiming most of the prior session's losses, after Fed Chairman Ben Bernanke indicated that all-out bank nationalization wasn't part of the goverment plan.
The Dow Jones Industrial Average gained 236.16, or 3.3 percent, to close at 7,350.94. The S&P 500rose 4 percentandNasdaq advanced 3.9 percent.
This came after stocks dropped more than 3 percent on Monday, ending at levels not seen since May 1997.
Bernanke said it would damage the value of banks too much if the government took them over, assuaging concerns about nationalization and potential wipeout of shareholder value.
Bank stocks rallied.
Bank of America shot up 21 percent, while Citigroup jumped 22 percent and JPMorgan advanced 7.7 percent.
The European banking sector also remained in focus following reports from the Financial Times that the UK government could scrap Lloyds’annual interest charge on loans from the government, in the hope of boosting lending.
And UBS may face a trial in the US as it wrangles with calls to disclose the details of thousands of its clients suspected of tax evasion, according to the New York Times.
General Motors soared 25 percent after U.S. Sen. Carl Levin (D., Mich.), who met with the Obama administration's auto task force this week, said bankruptcy is not the panel's goal.
American Express jumped 12 percent following news that the credit-card provider is offering some card holders $300 if they pay their balance and close their accounts.
Home Depot shares gained 11 percent after the home-improvement retailer reported a net loss of $54 million, or 3 cents a share. But excluding items, the profit came to 19 cents a share, which beat estimates of 15 cents.
And Macy's advanced 12 percent after the department-store giant beat earnings expectations and backed its outlook for the current year.
Also, shares of Medco Health Solutions rose 2 percent after the pharmacy-benefits manager said its fourth-quarter profit rose 32 percent.
In corporate news, state-owned insurance giant American Insurance Group is seeking fresh capital from the government, CNBC has learned, ahead of what is expected to be the biggest loss in American corporate history.
In the biotechnology sector, members of Genentech's board advised shareholders to rejectRoche's $42 billion bid for part of the company. The board’s committee said the price offered was not in shareholders’ interest.
In economic news, home prices continued to post record declines. Prices of single-family homes dropped 18.5 percent in December from a year earlier, according to an S&P/Case-Shiller home-price index.
And consumer confidence plungedto a record low in February. The Conference Board's confidence index dropped to 25 from a downwardly revised 37.4 in January. Economists had expected a more mild drop to 35.5.
Later, President Obama will address a joint session of Congress to outline his budget plan.
TUESDAY: Obama addresses Congress on budget
WEDNESDAY: Part 2 of Bernanke testimony; weekly mortgage applications; existing-home sales; earnings from Garmin, Liberty Media, Martha Stewart and Limited Brands
THURSDAY: Durable-goods orders; weekly jobless claims; new home sales; earnings from Cablevision, Dell, Gap, and Kohl's
FRIDAY: GDP; consumer sentiment
Send comments to email@example.com.