Advertisement

Archive for Thursday, November 29, 2007

Stocks climb with hopes of another interest rate cut

November 29, 2007

Advertisement

— U.S. stocks climbed for a second day Wednesday, with the Dow scoring its largest percentage leap so far this year, and a revived financial sector paving the way after a Federal Reserve official bolstered hopes for additional interest-rate cuts ahead.

"Risk perceptions are falling on the view that the worst is over for the financials. Bad news from the financials is no longer a catalyst for fear, panic and indiscriminate selling," said Frederic Ruffy, analyst at Optionetics.

The Dow Jones Industrial Average gained 331 points, or 2.6 percent, to 13,289.45, with all of the blue-chip index's 30 components ahead, led by the recently battered financial sector.

The Dow's gains marked the index's second largest point advance since Sept. 18, when it climbed 335.97 points, or 2.5 percent.

Of the blue chips, Citigroup Inc. was up 6.5 percent and American International Group Inc. climbed 5.9 percent.

Citigroup's advance follows a Wall Street Journal report that the banking giant had rebuffed a merger proposal from Bank of America Corp.

The broader indexes climbed as well, with the S&P 500 Index up 40.79 points, or 2.9 percent, at 1,469.02, and the Nasdaq Composite Index gaining 82.11 points, or 3.2 percent, to 2,662.91.

For the Nasdaq, the day marked the second biggest percentage gain of the year, placing second to the 3.5 percent rise for the tech-laden index on Nov. 13.

Crude-oil futures fell for a third day to close at two-week lows, with the contract for January delivery down $3.80 at $90.62 a barrel on the New York Mercantile Exchange.

Stocks only extended their gains after the afternoon release of the Fed's latest report on economic conditions, with the report concluding an economic slowdown under way.

Beyond expectations that the Fed would cut interest rates again at its next monetary policy-setting meeting Dec. 11, recent economic data fueled chances of "further aggressive tightening in 2008," said Chris Hensen, senior portfolio manager with MFC Global Investment Management.

Comments

Use the comment form below to begin a discussion about this content.

Commenting has been disabled for this item.