Citigroup, BofA and McDonald’s are among the top gainers.
US stocks rebounded from a two-month low on speculation a bank-rescue plan from President Barack Obama will shore up financial companies.
Citigroup Inc and Bank of America Corp, the biggest US banks by assets, jumped more than 10 per cent. International Business Machines Corp climbed 8 per cent after its 2009 profit forecast topped analysts’ estimates. McDonald’s Corp rose 2 per cent after being added to Goldman Sachs Group Inc.’s “conviction buy” list.
“Our guess is by the year-end, that the reflation going on with the monetary policy, the fiscal policy, the decline in the price of oil, all that reflation will overcome the deflationary forces, and we’ll have a somewhat higher market,” Robert Doll, who oversees about $300 billion as chief investment officer for global equities at BlackRock Inc, told Bloomberg Television.
The S&P 500 rose 2.2 percent to 822.52 at 9:59 am in New York. The Dow Jones Industrial Average added 142.33 points, or 1.8 per cent, to 8,091.42. The Russell 2000 Index climbed 1.8 per cent.
US stocks sank on Tuesday, sending the Dow average to its worst Inauguration Day decline, as speculation banks must raise more capital pushed financial shares to an almost 14-year low. The S&P 500 was off to its worst start to a year as on Tuesday, shattering the biggest rally since World War II, as analysts cut earnings estimates by a record 83 percentage points and companies signal worse to come.
Europe’s Dow Jones Stoxx 600 Index dropped 0.2 per cent, while the MSCI Asia Pacific Index slid 2 per cent.
Obama Team Meets: Treasuries fell for a third day on concern debt sales will increase as Obama called on Americans to rebuild the economy.
Obama meets with his economic advisers on Wednesday. The new president’s team is pushing to complete a bank-rescue plan that can be twinned with the $825 billion stimulus package being negotiated with Congress to alleviate the deepening financial crisis.
Full details of the rescue haven’t been settled yet, people familiar with the deliberations said the package is likely to include a $50 billion-plus program to stem foreclosures, fresh injections of capital into banks and steps to deal with toxic assets clogging lenders’ balance sheets.
Meanwhile, Treasury Secretary-nominee Timothy Geithner told Congress President Barack Obama plans within the next few weeks to propose a “comprehensive plan” for responding to the economic and financial crises.
The plan will address the credit crunch and the collapse of the housing market, as well as global economic conditions that require a coordinated international response, Geithner told a Senate Finance Committee hearing on his nomination on Wednesday.
