Open

Coming up

Don't miss

Replay


LATEST SHOWS

REVISITED

Is Beirut still haunted by ghosts of the civil war?

Read more

FRANCE IN FOCUS

Football scandals: The ugly side of the beautiful game

Read more

#THE 51%

Ending violence against women: The dangers of trial by Twitter

Read more

#TECH 24

Tech giants under scrutiny: The problem with Uber

Read more

FOCUS

Inside an Iranian nuclear research reactor

Read more

ENCORE!

Michel Hazanavicius on life after 'The Artist'

Read more

REPORTERS

France’s National Front in the spotlight

Read more

DEBATE

Al-Sisi's Egypt: Is the crackdown justified? (part 2)

Read more

FOCUS

Little support in Iran for nuclear negotiations with West

Read more

Wall Street euphoric ahead of Fed decision on rates

Text by REUTERS

Latest update : 2008-10-28

The New York Stock Exchange capped a day of spectacular rebounds across global markets as the Dow Jones closed up 10.88%, its second-biggest gain in history, amid hopes further US rate cuts may ease the global credit crunch.

U.S. stocks rose more than 10 percent on Tuesday, the second-biggest point gain ever for the Dow and S&P, after investors scooped up beaten-down shares on optimism that the U.S. Federal Reserve and other central banks will cut interest rates further.
 

Hopes for a rate cut grew at midday after a newspaper reported the Bank of Japan is considering lowering rates, further fueling hopes for a Fed cut after its latest policy meeting on Wednesday. Lower borrowing costs could help bolster corporate profits as the economy heads toward a deep recession.

 
Japan's Nikkei newspaper report pulled the yen down more than 5 percent against the dollar, easing worries after a recent sharp rally in the Japanese currency that had slammed global markets. On Tuesday, the yen suffered its biggest daily drop against the U.S. dollar since 1974.

 
Shares of capital-intensive companies such as telecoms posted the day's sharpest gains, including Verizon Communications, up over 14 percent, and AT&T, up over 13 percent.

Big oil companies gave the Dow its biggest boost after British major BP Plc reported a record quarterly profit, beating expectations. Exxon Mobil and Chevron both rose more than 13 percent.

 
Shares of Boeing jumped more than 15 percent to $48.91 after the aircraft manufacturer came to a tentaive agreement with its largest union to end a strike and stop revenue losses estimated at $100 million a day.

Typically when the market gets to oversold extremes, stocks see a bounce back, said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

 
"If you believe that governments around the world are going to be successful in reengerizing financial markets and gradually bringing back confidence and stability in the weeks and months ahead, then you probably want to be more of a buyer than a seller," Sheldon said.

The Dow Jones industrial average jumped 889.35 points, or 10.88 percent, to 9,065.12. The Standard & Poor's 500 Index surged 91.59 points, or 10.79 percent, to 940.51. The Nasdaq Composite Index ran up 143.57 points, or 9.53 percent, to 1,649.47.

It was the second-biggest point gain ever for the Dow and the S&P.

 
The yen's recent rally has forced an unwinding of the so-called "carry trade" -- a phenomenon of Japan's low interest rates, in which investors borrowed yen to finance investments in high er-yielding assets, such as U.S. stocks.

Wal-Mart's stock rose after the world's largest retailer stuck to its 2009 sales growth forecast, saying it will weather the economic turmoil now and could come out even stronger than its rivals when the economy rebounds. Wal-Mart shot up 11.1 percent to $55.17 on the New York Stock Exchange.

 
The rally came despite an economic picture that remained gloomy after data showed U.S. consumer confidence tumbled to a record low in October as the financial crisis made Americans anxious about their jobs and pessimistic about the future.

Verizon ended at $31.65, up 14.6 percent, and AT&T finished at $27.61, up 13.2 percent, in NYSE trading.

In the oil sector, Exxon climbed 13.3 percent to $74.86, while Chevron soared 13.5 percent to $70.02. The big energy producers' shares gained even as front-month U.S. oil futures slipped 49 cents to settle at $62.73 a barrel.

 
Whirlpool Corp tumbled 8.3 percent to $45.87 after the world's biggest appliance maker said it would cut 7 percent of its workforce and slashed its 2008 earnings outlook amid weakening demand.

Trading was moderate on the New York Stock Exchange, with about 1.73 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion. Most of the volume came in the last hour of trading.

On Nasdaq, about 2.77 billion shares traded, above last year's daily average of 2.17 billion.

Date created : 2008-10-28

COMMENT(S)