Friday, March 21, 2008

US stocks rally as confidence in financial institutions rises

US stocks rallied Thursday, closing higher for the first week in a month as investors speculated that financial institutions plagued by the credit crisis may be pulling back from the brink. Financial stocks led the gains despite a private survey that suggested the world's largest economy could yet be headed toward a recession.

The New York-based Conference Board's index of leading economic indicators fell 0.3 percent in February, its fifth straight monthly drop for the first time since the early 2001 recession.But analysts suggested now was the time to buy shares in financial firms that have suffered from billions of dollars in write-downs linked to a record number of foreclosures by homeowners with subprime mortgages.

"We're coming very close to a market bottom," Peter Sorrentino of Huntington Asset Management told Bloomberg Radio. "We've been developing a list of financial stocks." Another analyst, Richard Bove with Punk Ziegel & Co wrote that "the financial crisis is over" in a research note cited by Bloomberg, adding that now was a "once in a generation opportunity to buy".

The Federal Reserve has pumped more than $400 billion in Treasury securities into the market through a variety of lending facilities opened up to investment banks over the past weeks. The blue chip Dow Jones Industrial Average rose 261.66 points, or 2.16 percent, to 12,361.32. The broader Standard & Poor's 500 Index climbed 31.09 points, or 2.39 percent, to 1,329.51. The technology heavy Nasdaq Composite Index rose 48.15 points, or 2.18 percent, to 2,258.11.

The S&P 500 rose 3.2 percent for the week. Stock exchanges are closed Friday for the Good Friday holiday. The US currency rose against the euro to 64.83 euro cents from 64.03 euro cents Wednesday, but fell against the Japanese currency to 98.91 yen from 99.79 yen. Gold plunged $25.30 to $920.00 per fine ounce, capping its steepest weekly fall since 1990 according to Bloomberg.

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