Hopeful investors lift Dow 391 points
NEW YORK – Wall Street began the second quarter with a big rally Tuesday as investors rushed back into stocks, optimistic that the worst of the credit crisis has passed and that the economy is faring better than expected. The Dow Jones industrials surged nearly 400 points, and all the major indexes were up more than 3 percent.
Financial stocks were among the big winners after Lehman Brothers Holdings Inc. and Switzerland’s UBS AG issued new shares to help bolster their balance sheets. With that upbeat news and a fresh quarter ahead of them, investors appear quite willing to make some bets that the worst of the damage from the nation’s credit struggles has been felt. Moreover, the banks’ moves buttressed the view that financial services companies are taking aggressive action to improve their capital bases and stave off the potential of a collapse similar to Bear Stearns Cos.
The Dow rose 391.47, or 3.19 percent, to 12,654.47. It marked the eighth-biggest point gain ever for the Dow, and the third time in two weeks it came close to or surpassed 400 points.
Broader stock indicators also gained sharply. The Standard & Poor’s 500 index rose 47.48, or 3.59 percent, to 1,370.18 – the index’s best start to a second quarter since 1938. And the Nasdaq composite index rose 83.65, or 3.67 percent, to 2,362.75.
Major indexes ended the first three months of 2008 with massive losses, marking the worst period since the third quarter of 2002 when Wall Street was approaching the lowest point of a protracted bear market.
The 10-year Treasury note’s yield, which moves opposite its price, rose to 3.55 percent from 3.43 percent late Monday. The yield edged up to 3.56 percent in after-hours trading.
In addition to hopes about the financial sector, Wall Street was relieved to see the feeble dollar regain some strength against the euro. The euro fell to $1.5596 from $1.5785 late Monday in New York.
And there was optimism that commodities prices, which have hit historic highs in recent months, have begun to retreat. Crude oil fell 60 cents to settle at $100.98 a barrel on the New York Mercantile Exchange after earlier falling below $100. Meanwhile, gold dropped back below $900 an ounce.
“This is a nice way to begin the second quarter,” said Todd Leone, of Cowen & Co. “All the financials are up big, and there’s a sense that things are turning. We definitely have not seen the last of the credit crisis, but we’re getting closer.”