// October 29th, 2008 // 1 Comment » // Hott News
surge is good
By John Charles Reedburg
Today was a good day. Ladies and Gentlemen.
After weeks of seeing traders on the floor of the New York Stock Exchange totally freak out, it appears they’re smiling again.
What caused this sudden surge of happiness? It might be the fact that the Dow was up 889 points when the floor closed Tuesday. That’s a more than 10 percent gain.
Now, I’m not a stock market expert, but I do know that gain is good. I also know that seeing happy traders versus angry ones makes me feel a lot more comfortable about our economy.
Don’t get what I’m saying? Here’s an example.
Seeing this makes me more comfortable:
Than seeing this:
Or this:
Get it? Good.
Wall Street had another astounding advance Tuesday, with the Dow Jones industrials soaring nearly 900 points in their second-largest point gain ever as late-day bargain hunters stormed into the market.
The Wall Street Journal reports that. For a second time this month, stocks surged more than 10%.
A day after closing at a 5½-year low, the Dow Jones Industrial Average leapt 889.35 points, or 11%, to 9065.12, with gains in all 30 components. It was the second-biggest point gain in the Dow’s 112-year history, behind the 936.42-point rise on Oct. 13, and its sixth-biggest percentage gain ever.
Still, the blue chips remain 36% below their record close on Oct. 9, 2007. It was only the fifth gain this month.
“If you went to Macy’s and you saw that all the merchandise was 45% off, people would be buying like crazy. That’s what’s going on in the stock market right now,” said Anthony Conroy, head trader at BNY ConvergEx, a New York brokerage firm.
The Standard & Poor’s 500-stock index, which also hit a 5½-year low Monday, jumped 11% to 940.51, its biggest gain since Oct. 13. All of its sectors were higher, led by financial companies, up 16%.
But following that Oct. 13 rebound, stocks gave back all of their gains and more. The big question now is whether Tuesday’s moon shot will be another “dead cat bounce,” as Wall Street terms temporary recoveries during a bear market, or will mark the start of a more-lasting recovery.
Some analysts argue that the declines of the past two weeks mark a “retest” of lows hit earlier this month and that the market’s ability to rebound is a sign stocks are slowly finding a bottom. Others say it is too soon to declare the bear market over, and the financial crisis and the recession are so bad that more declines are likely.
“We still need more than one good day,” said Phil Roth, chief technical market strategist at brokerage firm Miller Tabak. “With the outsized gains today, another good day could easily come…it doesn’t have to be tomorrow.”
But Mr. Roth added that a new bull market will require “considerable” buying, which isn’t likely without a big drop in interest rates.There were a variety of catalysts for the day’s action, including news that lending markets are slowly unfreezing, a report that the government may be preparing to lend $5 billion to General Motors and hopes that the Federal Reserve will announce another interest-rate cut Wednesday. The Fed could push its target short-term lending rate down to 1%, which would equal the 40-year low in 2003.
As investors poured into the stock market, the price of the 10-year Treasury note fell, pushing its yield up to 3.822%. Bids for junk bonds and bank loans also rose, as did bonds of auto makers GM and Ford Motor.
The commercial-paper market loosened as the Federal Reserve’s program to lend directly to companies helped provide access to cash for three months, providing flexibility to plan beyond just the day-to-day needs.
Meanwhile, the Conference Board said its consumer-confidence index fell to a low in October, worse than most economists forecast.Separately, the Standard & Poor’s/Case-Shiller 20-city housing index, a closely watched index of home prices, fell in August by its steepest annual rate since its inception in 2000.
Share and Enjoy: 
