US stocks rally on hopes for bailout plan

October 1st, 2008 - 4:48 am ICT by IANS  

New York, Oct 1 (DPA) US stocks rallied Tuesday, erasing much of the record losses a day earlier on revived hopes for a rescue plan for the financial system, with bargain-hunting investors helping the rise.The Standard & Poor’s 500 Index recovered more than half of Monday’s 8.79 percent drop, Bloomberg financial news service reported. The drop was the largest in two decades.

Indices dropped dramatically Monday after the US House of Representatives rebuffed the $700-billion bail-out package intended to thaw out credit lines frozen by bad mortgage assets and securities.

Bush Tuesday again urged Congress to pass the plan, while Senate leaders indicated they would continue to work on the deal despite its failure in the House.

Tuesday, large financial firms JPMorgan Chase & Co, Citigroup Inc and Goldman Sachs Group Inc advanced more than 13 percent as Democrat and Republican congressional leaders said a bailout deal would eventually pass.

The broad-based S&P 500 rose 58.35 points, or 5.27 percent, to 1,164.74. The blue chip Dow Jones Industrial Average gained 485.21, or 4.68 percent, to 10,850.66, after falling a record 777.68 points, or 6.98 percent, Monday. The Nasdaq Composite Index added 98.60, or 4.97 percent, to 2,082.33, after shedding 9.14 percent on Monday.

European and Asian shares put in a mixed performance Tuesday but showed greater resilience than many market watchers had expected. After predictable early trading losses in Asia, shares began to turn around again with some exchanges posting slim gains, while in Europe the fluctuations on the market were moderate.

The US dollar improved against the euro to 71.05 euro cents from 69.30 euro cents Monday. The greenback was up against the Japanese yen to 106.33 yen from 104.05 Monday.

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