Unexpected good news from Citigroup sparked a nice rally in stocks and an even greater rally in the financials. Citigroup's CEO stated that the company's first two months were profitable which ignited a huge oversold rally in both the banks and insurers.
As you know I have been very concerned about the action in the insurance stocks as of late. On last Sunday's radio show I told my listeners to consider liquidating fixed annuities. Although it was a relief to see the insurers and banks have a bounce, positive action must be sustained or down again we go. Battered stocks were looking for any reason to rally and reacted to the news with a 387 point move in the Dow and an 87 point pop in the NASDAQ.
It is somewhat encouraging to see the market gain strength into the close instead of falling back as has been the case lately. Let's see what happens tomorrow.-Lou
Powerful Rally Shakes Stocks Out of Slump
Hope that fortunes may be turning for troubled banks and that regulators are moving aggressively to address disruptions in the markets helped drive a broad stock rally on Tuesday.
The Dow Jones Industrial Average rose 379.44 points, or 5.8%, to 6926.49, closing at its high for the day and recording its biggest point and percentage gains since late November.
The S&P 500-stock index surged 43.07 points, or 6.4%, to end at 719.60 as its financial sector gained 15%. The Nasdaq Composite Index gained 89.64 points, or 7.1%, to 1358.28. Tech stocks snapped back from a sharp selloff on Monday that pushed stock indexes to fresh bear-market lows.
Gains were paced by shares of Citigroup, which jumped 38% after it said it was profitable during the first two months of the year. Citi is generally seen as one of the more troubled lenders, and its upbeat comments sent other banks soaring. J.P. Morgan Chase gained 23% and Bank of America rose 28%. Citi shares still ended at just $1.45 and have fallen 93% over the last six months.
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