After nearly a month of going down, the stock market had one of it’s best days in history:
The Dow Jones industrial average gained 936 points on Monday, the biggest gain in the American stock market since the 1930s, as Wall Street continued to careen through the worst crisis in decades.
The surge came as governments and central banks around the world took aggressive steps to unlock the flow of credit, ushering in a drastic reshaping of the banking industry even as doubts lingered about its long-term effects.
The 11.6 percent gain in the broad Standard & Poor’s 500 index was the best single-day gain since 1939. It came after stocks suffered through their worst week since 1933. The Dow, which closed at 9,387.61, is now back to its levels from Thursday.
The rally stretched around the globe. In Paris and Frankfurt, stocks had their biggest one-day gains ever, rising more than 11 percent.
Over the weekend, central banks flooded the financial system with billions of dollars in liquidity, throwing out the traditional financial playbook in favor of a series of moves that officials hoped would get banks lending again.
European countries — including Britain, France, Germany and Spain — announced aggressive plans to guarantee loans, take ownership stakes in banks or prop up ailing companies with billions in taxpayer funds. In Washington, Henry M. Paulson Jr., the Treasury secretary, planned to meet Monday afternoon with Wall Street chiefs to hash out the terms of a new round of government intervention.
Monday morning also brought word that a financing deal for Morgan Stanley, the embattled investment bank, had finally gone through, a closely watched engagement that had become a gauge of confidence in the markets. Shares of Morgan Stanley rose 87 percent.
The ultimate judgment on this weekend’s developments may have to wait until Tuesday, when credit markets reopen after the Columbus Day holiday. Problems in the flow of credit are at the root of the current crisis; if these markets remained locked on Tuesday, stocks could fall once again.
So, it remains to be seen if this is the beginning of the end, or merely a dead-cat bounce.
October 13th, 2008 at 7:17 pm
Dont sleep, bond markets were closed. deposits and despots
. I gues Mayer Amschel Rothschild was right “Give me control over a nation’s currency, and I care not who makes its laws.”