Wall Street bounces back after record plunge(Lead)December 3rd, 2008 - 10:14 am ICT by IANS
New York, Dec 3 (IANS) The US markets rallied Tuesday, a day after the benchmark Dow Jones plumbed to a 26-year low.Market analysts said the Wall Street recovery could be due to investor belief that the three major US automobile manufacturers would get some kind of a bailout package from the federal government.
General Motors, Chrysler and Fords Tuesday submitted a $34 billion bailout package proposal to save them from bankruptcy.
Dow Jones Industrial Average, which dropped by 679.95 points Monday, rallied behind and rose to 270.00 points or 3.31 percent, at the end of the trading Tuesday afternoon.
Similarly, Standard & Poor’s 500-stock gained 32.60 points, or 3.99 percent to 848.81.
The Nasdaq Composite picked up 51.73 points, or 3.70 percent to 1449.80.
“I think yesterday (Monday) was overdone and all we’re doing today (Tuesday) is reversing some of that,” Paul Nolte, director of investments at Hinsdale Associates, told Fox Business.
The recovery was led by the banking sector, with both the Bank of America and Citigroup gaining by nearly 12 percent each, while the stocks of J.P. Morgan Chase and American Express increased by 9.2 percent and 5.7 percent respectively.
The stocks of General Motors gained by 5.7 percent, so did Ford’s (5.9 percent). Among the other major gainers was General Electric (13.6 percent).
“You have companies right now reaching a point where their shares really can’t go any lower,” Neil Hennessy, president of Hennessy Funds in Novato, California, was quoted as saying by The Wall Street Journal.
At the same time, he said: “It’s probably going to take awhile longer, with a lot of late-day volatility, before that message really sinks in for a lot of investors. People will eventually just get tired of following all the big daily moves and start focusing on the long term.”