Stocks jump on improving economic news, accounting change
NEW YORK -- Wall Street has extended a four-week rally on more good news about the U.S. economy.
Market indicators soared more than 2% following an accounting rule change that could strengthen banks' balance sheets and fresh efforts by world leaders to fight the financial crisis. The day's news buoyed a newfound sense of optimism in the market that the economy may finally be on the mend.
Still stocks were off their earlier highs, as investors are mindful of a closely watched monthly report on employment coming up Friday morning.
According to preliminary calculations, the Dow rose 216.48, or 2.8%, to 7,978.08. Earlier the Dow jumped back over 8,000 before pulling back some late in the day.
The Standard & Poor's 500 index rose 23.30, or 2.9% to 834.38 and the Nasdaq composite index jumped 51.03, or 3.3%, to 1,602.63.
"Everyone is in a buying mood," said Eric Ross, director of research at brokerage Canaccord Adams. "Everyone is feeling good. ... A lot of this is simply confidence."
Financial stocks led the rally, getting a big boost after a rulemaking body for the accounting industry relaxed financial reporting rules that force banks to value their assets at current market prices.
The change in "mark-to-market" accounting rules, which should help banks reduce losses, sends another lifeline to the troubled financial industry. Many investors believe financial stocks, which have largely carried the market's four-week rally, are a gauge of when the economy is turning.
The advance came as the world's finance ministers finished a one-day summit in London to discuss efforts to fix the global economy. While the G-20 leaders did not satisfy calls for new stimulus measures, they pledged an additional $1.1 trillion in financing to the International Monetary Fund and declared a crackdown on tax havens and hedge funds.
Another positive indicator on the economy also lifted sentiment on Wall Street. Factory orders posted a large increase, following Wednesday's better-than-expected readings on pending home sales, manufacturing activity and auto sales.
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