Dow comes back big The third-highest point gain ever for the blue-chip measure comes on bets that a bailout plan can get passed.
By Alexandra Twin, CNNMoney.com senior writer NEW YORK (CNNMoney.com) -- Stocks rallied Tuesday, with the Dow jumping 485 points on bets that Congress will pass a version of the government's $700 billion package, following Monday's crushing defeat. But credit markets remained frozen. Several closely watched measures of bank lending fear hit all-time highs, as firms continued to hoard funds. The Dow Jones industrial average (INDU) added 485 points, recovering much of the record 777 points lost the day before. It was the third-biggest one-day point advance for the indicator in its history. The Standard & Poor's 500 (SPX) index rose 5% and the Nasdaq composite (COMP) gained about 5%. Stock gains accelerated late in the day after the FDIC - the agency that insures depositors in case of a bank failure - said it wants to increase the amount of money it can insure. Raising the limits could make businesses and individuals less anxious to withdraw money from accounts at a struggling bank. It could also help get the $700 billion plan passed by mollifying critics who think the plan is too focused on Wall Street, rather than Main Street. (Full story) Later Tuesday evening, Senate leaders said they expected to vote on a version of the bailout bill on Wednesday, with new provisions that include a lifting of the FDIC limit. But the actual impact from any increase in the insurance would be more psychological than anything else, said Brian Battle, vice president at Performance Trust Capital Partners. "They're trying to make bank deposits more sticky so people won't pull money out." At around the same time, the SEC and FASB - which monitors accounting standards - said it will announce guidance later this week on how financial companies can use fair-value accounting, which some have blamed for the escalation of the liquidity crisis. Fair value, or mark-to-market accounting, says all assets have to be valued at what price they could be sold at immediately. When a company that is struggling sells assets cheap to raise money, it drags down prices for the overall market. Some critics have said temporarily suspending this rule would help the market for such securities gradually move higher. The failed version of the $700 billion bill alluded to the potential for changes in those accounting rules. Battle said he thinks the agencies were trying to hedge their bets in case the newest version of the bill calls for a temporary suspension of the rules. Tuesday's advance marked a readjustment on the part of investors, as they moved beyond the panic of Monday's historic selloff, said Matt King, chief investment officer at Bell Investment Advisors. "I think people are realizing that yesterday's selling was overdone in terms of the fear," he said. That fear stoked a mass of sell orders near the close Monday, leading to Tuesday's rally or "dead-cat bounce," said Alan Lancz, director of Lancz Global. "If the government thought it could make Wall Street a promise and then take it away, Monday showed them otherwise," King said. He noted that in the previous week, when the bailout was first announced, the Dow rallied roughly 800 points in two sessions. But when the bailout appeared to be off the table, the Dow gave back almost all of that. Despite Tuesday's gains, September easily earned its reputation as the worst month on Wall Street, according to Stock Trader's Almanac. -- Office space for rent in Surabaya. Just 3 km from CBD. Contact: 031-5013570, HP: 0852 3008 3510 or mailto:[EMAIL PROTECTED] ------------------------------------ Kunjungi situs http://www.info-saham.com untuk informasi seputar saham. DILARANG KERAS MEMOSTING OPINI PRIBADI TENTANG POLITIK DI MILIS INI. Silahkan lakukan itu di milis [EMAIL PROTECTED] [EMAIL PROTECTED] untuk berhenti dari milis saham [EMAIL PROTECTED] untuk bergabung ke milis saham Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/saham/ <*> Your email settings: Individual Email | Traditional <*> To change settings online go to: http://groups.yahoo.com/group/saham/join (Yahoo! ID required) <*> To change settings via email: mailto:[EMAIL PROTECTED] mailto:[EMAIL PROTECTED] <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
