Following a stomach-churning sell-off on Wall Street, stocks had nowhere to go this morning but up. Although the government's proposed bailout package failed to win the approval of the House on Monday, investors are hoping that yesterday's dramatic drop in stocks will serve as a wake-up call to reluctant legislators. Congress wasn't in session today, in observance of Rosh Hashanah, but hopes are high on Wall Street that a revised version of the rescue plan will win approval from House holdouts as soon as Thursday. While the Dow advanced ever deeper into triple-digit gain territory as the day wore on, signs of distress are still apparent in the credit market -- the benchmark Libor rose overnight to a record high of 6.88%, pointing to an increasingly tight lending environment. However, traders shrugged off this bit of unpleasantness, along with a slew of troublesome economic reports, to send stocks soaring.
The Dow Jones Industrial Average (DJIA 10,850.66) closed not far from its highs of the session, up 485 points, or 4.7%, for the day. Of the Dow's 30 components, only Caterpillar (CAT) slipped into the red. Meanwhile, J.P. Morgan Chase (JPM), Chevron (CVX), and Bank of America (BAC) paced the advancing issues. Despite the blue-chip barometer's impressive rebound rally, the Dow shed 6% during September.
The S&P 500 Index (SPX 1,164.74) surged today to a gain of 58 points, or 5.3%, though it also fell to a monthly loss of 9.2%. The SPX managed to maintain a foothold atop its critical 160-month trendline. Finally, the Nasdaq Composite (COMP 2,082.3) surged back atop the 2,000 level with a daily gain of 99 points, or 5%. For the month, the COMP swallowed the steepest loss of the 3 indices, down 12% for September.
Turning to equities in focus, Sovereign Bancorp (SOV) was swarmed by massive put volume amid yesterday's plunge ... Wells Fargo (WFC) was buoyed by an upgrade to "neutral" ... Deere & Co. (DE) unveiled its plans for a new joint venture ... the CBOE Market Volatility Index (VIX) pulled back from Monday's multi-year high ... Biogen Idec (BIIB) was hit with unusual option volume following a ratings update from Standard & Poor's ... and today's Quote of the Day comes from this MarketWatch article, which examines some of the more unsavory links between Washington and Wall Street as the bailout package lingers in limbo:
"On average, representatives that voted for the Wall Street bailout package received more campaign contributions from financial firms, by a 2-to-1 margin, than members who voted against the bailout."
But these weren't the only headlines hitting the Street today. Click on the links below for our Daily Market Blog coverage of:
And, in case you missed it, Andrea Kramer examined the surprising similarities between trading options and boxing in this week's edition of Advanced Option Strategies. Click here to watch the video.
For today's activity in crude oil, gold futures, options, and more, turn to page 2.
Crude futures were also caught up in Monday's widespread bloodshed, but the front-month contract staged a respectable comeback today. Despite heated partisan bickering on Capitol Hill, presidential nominees John McCain and Barack Obama separately voiced the urgency of a quick resolution to the credit crisis. Meanwhile, President Bush -- who's no doubt counting the days until January 20 -- asserted that Monday's unfavorable vote was "not the end of the legislative process" for the rescue plan. As investors considered a potential Band-Aid to the ailing economy, November-dated crude oil added $4.27, or 4.4%, to settle at $100.64. For the month, crude oil is down 12.8%.
Gold futures couldn't catch a break today, as the U.S. dollar exerted some serious muscle versus its foreign rivals. As Europe struggled with its own banking-sector meltdown, the euro endured its largest-ever daily drop versus the greenback. A strong rebound in the equities market, prompted by fresh optimism over a revamped bailout plan, also lessened demand for the safe-haven metal. Gold for December delivery dropped $13.60, or 1.5%, to arrive at $880.80 an ounce. However, the month's market mayhem was ultimately a positive catalyst for the precious metal, which ended September up 5.5%.
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