Bank News, Economic Data Boosts Stocks
Tuesday April 1, 5:50 pm ET
By Joe Bel Bruno, AP Business Writer
Wall Street Surges on UBS and Lehman Brothers Stock News,
Better-Than-Expected Economic Data
NEW YORK (AP) -- 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.
Analysts believe there must be a recovery in bank and brokerages to lead
major stock indexes higher. Some of the biggest financial players had their
sharpest moves of the year Tuesday -- Citigroup Inc. shot up 11 percent,
JPMorgan Chase & Co. rose 9 percent, and Lehman surged 18 percent.
"Investors have a difficult time making decisions about the stock market if
they don't have confidence in major financial institutions, so there's been a
lot of sideline cash," said Richard Cripps, chief market strategist for Stifel
Nicolaus. "The extreme conditions that we've seen here over the past few months
has been missing that confidence ... but that appears to be changing, and we're
seeing the response."
Meanwhile, Wall Street got another boost when the Institute for Supply
Management said its March index of national manufacturing activity rose to a
reading of 48.6 -- indicating a contraction, but a slower one than in February
and tamer than many analysts had predicted. Government data on construction
spending for February also came in better than expected.
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.
The advance was in contrast to a lackluster session on Monday, where stocks
managed a moderate gain in the final session of a dismal first quarter. 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.
Renewed enthusiasm that the credit crisis might be waning was also felt in
the Treasury market, where government securities fell as investors withdrew
money to take bets on stocks. 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.
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