Global Stocks Up After Fed’s Announcement

US stocks rose the most in five weeks after the Federal Reserve announced Tuesday it will inject $200 billion into the financial system to ease financing strains through weekly auctions to so-called primary dealers, the 20 banks and securities firms that trade directly with the central bank. The funds will be secured for a term of 28 days rather than overnight as in the existing program by a pledge of other securities, including federal agency debt, federal agency residential-mortgage backed securities and non-agency AAA/Aaa-rated private-label residential mortgage backed securities. The move was made in conjunction with similar liquidity moves by the ECB, Swiss National Bank, Bank of England and Bank of Canada. While this liquidity boost is a cheer to the financial system, it is only a temporary solution, providing some much-needed relief among banks and mortgage brokers.

Citigroup [[c]], JPMorgan Chase [[jpm]] and Bank of America [[bac]] led financial shares to their biggest advance since January 28 on the Fed’s unprecedented move. European shares rose for the first time in four days and Asian stocks also rebounded.

US Treasuries fell, pushing the two-year note’s yield up the most since May 2004, as investors sold government debt and bought stocks.

Washington Mutual [[wm]] rose the most in almost eight years on speculation that Warren Buffett and Goldman Sachs Group may invest in the company. Washington Mutual gained as much as 26% in early New York trading. Washington Mutual fell to a 12-year low yesterday, three days after Merrill Lynch said the bank may report $11.2 billion in mortgage-related losses.

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Comment by Tuco

2008-03-11 22:12:51

hope this can help stocks recover from recent losses!

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Comment by Yas

2008-03-12 08:06:10

a rally at last, was wondering how much the stocks could fall

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