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Bank, housing news puts Dow up about 500
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Published: March 24, 2009
NEW YORK
Wall Street got the news it wanted on the economy's biggest problems -- banks and housing -- and celebrated by sending the Dow Jones industrials up nearly 500 points.
Investors added rocket fuel yesterday to a two-week-old advance, cheering the government's plan to help banks remove bad assets from their books and also welcoming a report showing a surprising increase in home sales. Major stock indicators rose about 7 percent, including the Dow, which had its biggest percentage gain since October.
Analysts said they saw more fundamental strength in yesterday's buying than they saw at the start of the rally two weeks ago. Dave Rovelli, the managing director of trading at brokerage Canaccord Adams, said that there appeared to be less short covering, which occurs when traders have to buy to cover misplaced bets that stocks would fall.
"There is definitely new buying," he said. Rovelli also said that the approaching end of the quarter can make money managers eager to buy into a market to make the statements they send to clients look stronger.
The Dow rose 497.48, or 6.8 percent, to 7,775.86, its highest finish since Feb. 13. It was the biggest point gain for the blue chips since Nov. 13 when they rose 552 points and the biggest percentage gain since Oct. 28, when they rose 10.9 percent. It was the fifth-biggest point gain in the Dow's history.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 54.38, or 7.1 percent, to 822.92, crossing the psychological milepost of 800. The Nasdaq composite index rose 98.50, or 6.8 percent, to 1,555.77.
The Russell 2000 index of smaller companies rose 33.61, or 8.4 percent, to 433.72.
The Dow Jones Wilshire 5000 index, which reflects nearly all stocks traded in America, rose 7 percent. That is a paper gain of about $700 billion.
The Dow is now up 1,228 points, or 18.8 percent, from March 9, when it finished at its lowest point in nearly 12 years, although it is still down 1,000 points in 2009. The S&P 500 is up 21.6 percent in that time.
The Dow and the S&P 500 index remain more than 45 percent below their peak in October 2007.
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