First Black Friday, and now the Modern Finance Farce Company With Surprise Twist Endings takes on the global bailout...
Wall Street had another extraordinary rally Friday as investors stormed back into the market, relieved that the government plans to restore calm to the financial system by rescuing banks from billions of dollars in bad debt. The Dow Jones industrials soared about 370 points, giving them a gain of about 780 over two days, and Treasurys fell as money flowed into equities.
The government's proposal, while still a work in progress, has placated investors who worried that a continuum of bad bets on mortgages would hobble more financial companies and cause further damage to the strained banking system and the overall economy.
"If a solid plan is put in place, it's definitely going to be a positive in easing the pain," said Stephen Carl, principal and head of equity trading at The Williams Capital Group. He added, though, that the set-up of any plan will determine its success.
Analysts said it was the first government response decisive enough to restore confidence in the markets; in the past, it has relied largely on steps like injecting cash into the banking system that, at least until now, had a limited impact.
"Everything they had done had been a Band-Aid approach, at the margins," said Jay Mueller, economist at Strong Capital Management. "Now we're dealing with the root problem."
Surprise twist: Date: September 19, 2008
h/t Naufal Sanaullah