On the Rebound: Dow Closes Near 8,000
Markets jumped above 8,000, buoyed by better-than-expected housing news.
April 2, 2009— -- Markets around the globe -- in London, Paris, Frankfurt and New York -- all staged powerful rallies Thursday on hopeful signs that the world's biggest economies are committed to working together to end the global recession.
At the G-20 summit in London Thursday, world leaders agreed to infuse $1.1 trillion in loans and guarantees to help developing countries, as well as to enforce regulations on financial institutions -- all in the name of global economic recovery.
On the floor of the New York Stock Exchange Thursday, investors showed confidence in the news developments by buying stocks, sending the Dow Industrials above 8,000 for the first time in two months. The Dow settled just below -- closing at 7,978.08. Thursday's gain marked the best four-week rally since 1933.
Actions at the G-20 strengthened burgeoning optimism that government leaders are doing what's necessary to revive the global economy.
"When you get all of the world leaders together to discuss our global economic problem and there's good constructive comments that come out of it, it's clearly going to have a positive reaction to our market," said Jonathan Corpina, senior managing partner at Meridian Equity Partners.
The International Monetary Fund welcomed action by the G-20 leaders to pump a little over $1 trillion into global markets.
"The G20 leaders have today sent a powerful signal that the international community is committed to support these countries, including by ensuring that the IMF has the resources available," said IMF Managing Director Dominique Strauss-Khan.
'First Signs of an Economic Spring' Bloom
But the good vibes coming out of the G-20 were not the only fuel for today's rally. The market also got a boost from new accounting rules that could help banks avoid taking huge losses on assets they are having trouble selling right now.
"The good news for banks is that it should buy them some time at a critical juncture when their solvency is in doubt," said Bill Stone, chief investment strategist at PNC Bank.
Investors also were heartened that after six months of declines, the battered manufacturing industry reported that factory orders were up 1.8 percent in February. Indicators such as pending home sales and construction spending also were better than expected; even car sales have improved from March to February, jumping nearly 25 percent.
"They see the first signs of an economic spring, if you would -- a few blooming flowers," said Art Cashin, director of floor operations at UBS.
While signs of economic progress abound, the government releases its latest monthly jobs report Friday, which is expected to show another 658,000 jobs lost in March and unemployment rising sharply from 8.1 to 8.5 percent.