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Dow Soars 936: Furious Rebound as Paulson, Wall St. Titans Meet
Posted Oct 13, 2008 05:23pm EDT by Aaron Task in Investing, Newsmakers, Banking
With the bond market closed for Columbus Day, the stock market was the main attraction on Wall Street Monday - and what a magnetic attraction it was!
Coming off the worst week in its history, the Dow posted its biggest-ever point gain Monday, soaring 936.42 points, or 11% , to 9388. The S&P had its biggest gain since 1987, jumping 11.6% to 1003 and the Nasdaq gained 11.8% to 1844.25.
Even those expecting a rally from last week's "oversold" conditions were taken aback by the scope of the advance. "Yes, but not in one day -- and that's half my forecast gain," was how Barry Ritholtz responded to a question about whether this was what he expected when he cited 10 bullish indicators on Friday.
Rationality has clearly taken a backseat - on both up and down days - but many observers attributed today's outsized gains to a combination of fundamental factors, including:
- Stocks having become cheap - or at least attractive - on a valuation basis after their stunning fall. (Even as he forecast a "doozy" of a recession, hedge fund legend Julian Robertson made the bull case for Apple, Microsoft, Baidu, Visa and Mastercard on CNBC.)
- The G7's undefined pledge to "take decisive action" and use "all available tools" to alleviate the crisis, followed by the U.K.'s defined injection of $64 billion into three big banks.
- Mitsubishi UFJ closing its investment in Morgan Stanley, at terms generally favorable to the U.S.
investmentcommercial bank. - The plan for the U.S. bailout, as outlined by Interim Assistant Treasury Secretary for Financial Stability Neel Kashkari.
- Expectations for details on Kashkari's outline to emerge tomorrow following a not-so secret meeting between Bush administration officials and top Wall Street executives.
The second thing to note is that after all the rhetoric about protecting taxpayers and not bailing out fat cats, the government and top Wall Street executives are working out on how to "best" spend $700 billion.
Yes, I feel much better now. You?
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