Monday, March 23, 2009
Stocks Surge on Bank Plan, and Housing Market News
Written by Craig Rozelle
Wall Street is getting the good news that they have been waiting for to end this recession. Both banks and the housing markets are providing good indicators that are leading to a rally on Wall Street. Investors were very happy to learn that the governments new plan to help banks remove bad assets from their books as well as a 4 percent increase in home sales. The major stock indicators jumped as much as 6 percent, including the Dow Jones industrial average that jumped more than 400 points.
The Treasury Department bad asset cleanup program would use some of the $700 billion financial rescue fund and involve help from the Federal Reserve, the Federal Deposit, and private investors. Treasury Secretary Timothy Geithner had announced an outline of the program last month but provided few details then about how it would work, leading to a poor reception in the markets. Both Bank of America and Citigroup were two of the most heavily helped companies by this announcement. Both companies soared at least 15% because of the news that the U.S. Treasury Department would finance $1 billion dollars in distressed assets.
The housing report released Monday was very positive for the markets even though it showed a decline in home prices in February. Investors are embracing any sign that the struggling home markets are improving.