NEW YORK -- Wall Street rebounded sharply Tuesday after the Federal Reserve and other central banks said they will pump $200 billion into the financial markets to help ease the strain from the credit crisis. The Dow Jones industrials surged more than 270 points.
Trader Donato Vaccaro, second left, works on the floor of the New York Stock Exchange, Monday, March 10, 2008. Stocks sank Monday as oil's surge above $108 a barrel and more worrisome signs for the financial sector led investors to extend last week's losses. [Agencies] |
The program is part of a worldwide effort to help struggling banks and mortgage providers. The Fed acting in concert with the European Central Bank, the Bank of Canada and the Swiss National Bank agreed to loan banks money in exchange for debt that includes slumping mortgage-backed securities.
The Fed's latest move was seen as a direct boost to struggling banks by avoiding having to dramatically slash interest rates when the central bank's policymaking Open Market Committee meets next week. Economists continued to be concerned about the unrelenting rise in oil prices and the dollar's weakness, which contribute to inflation and cutting rates only add to these pressures.
"The big problem has been the financials, and this helps supply money directly to the banks and may take some of the need for aggressive rate cutting off the table," said Peter Dunay, chief investment strategist at Meridian Equity Partners. "The Fed is basically going to take the bad loans off the banks' books, and the market seems to be loving that idea."
The Dow rose 271.91, or 2.32 percent, to 12,012.06. The index is still down more than 2,100 points from its October 2007 record high.
Standard & Poor's 500 index rose 26.69, or 2.10 percent, at 1,300.05, while the Nasdaq composite index added 52.72, or 2.43 percent, to 2,222.06.
