Stock Market Recap: Stocks Surge On Citigroup Bailout
The government plan for Citigroup (NYSE:C) gave Wall Street something positive to think about as markets went north today. The Dow (^DJI) closed out Monday at 8443 points, after rising nearly 400 points during the day. The Nasdaq (^IXIC) closed at 1472 points after rising 87 points on the day. The S&P 500 (^GSPC) finished at 850 points, and gained 51 points. These increases come after huge gains of around 6% from each major index on Friday. In international trading, Britain’s FTSE 100 (^FTSE) went up 9.84%, while Japanese markets were closed due to a holiday.
The government bailout of Citi will consist of $20 billion to be invested directly into the bank and $360 billion for investment in risky assets. Current President George W. Bush has been involving President Elect Barack Obama during the formation of the plan, and both feel that a success here could very much help the broader financial sector.
Essentially with this new decision, it is clear the government acknowledges Citi as simply being too big to fail. Shares of Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), and Goldman Sachs (NYSE:GS) enjoyed huge climbs in share prices as news of the aid for a fellow bank spread optimism.
The 10-year Treasury note yield rose to 3.36% from 3.20%, showing signs that some investors had possibly moved back into the stock market.
In other news, the dollar was mostly lower against other major currencies. Oil went up $4.61 to $54.54 on the NYMEX, while gold prices rose by $29 to finish at $822.
Disclosure: The fund the auther is associated with is long GS.