BLBG: Global Stocks Rally on Improving Economic, Banking Outlook
Global stocks climbed for a fifth day as the Group of 20 vowed to clean up toxic assets, Federal Reserve Chairman Ben S. Bernanke said the recession may end this year, and Barclays Plc reported a “strong” start to 2009.
Barclays, the U.K.’s third-biggest bank, jumped 17 percent. Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., which triggered a record rally in financial shares last week after saying they were profitable in January and February, added at least 1.7 percent. General Electric Co. climbed 5 percent as UBS AG said the chances of more “negative catalysts” are lower. Benchmark U.S. indexes extended gains from the best week since November as Bernanke said the U.S. will avoid a depression.
The S&P 500 Index added 0.9 percent to 763.55 at 9:36 a.m. in New York. The Dow Jones Industrial Average rose 68.73 points, or 1 percent, to 7,292.71. The MSCI World Index increased as benchmark stock gauges from Tokyo to London added at least 1.7 percent. Treasuries, gold and oil fell, while copper rose.
“We are making a lot of progress now,” said Dan Veru, who helps oversee $2.8 billion at Palisade Capital Management in Fort Lee, New Jersey. “The banks are clearly the most critical component to an economic recovery in the U.S. and the global economy. These are clearly moves in the right direction,” he told Bloomberg Radio, referring to recent comments from Barclays, Bank of America, JPMorgan and Citigroup.
Bernanke’s Call
Finance chiefs from the Group of 20 nations vowed to work together to help global banks recover from more than $1.2 trillion in credit losses. Bernanke said in an interview broadcast on CBS Corp.’s “60 Minutes” yesterday that, should the government succeed in stabilizing the financial system, the recession will probably end this year and the economy will expand in 2010.
The S&P 500 rallied 11 percent and the Dow gained 9 percent last week. The S&P 500 Financials Index surged 34 percent, the best week since the gauge was created in 1989.
The S&P 500 has declined 16 percent in 2009, rising in only two of 10 weeks this year, as falling shares of banks raised concern the government would be forced to nationalize some lenders.
Citigroup surged 9 percent to $1.94 today. Bank of America gained 8 percent to $6.22 and JPMorgan added 1.7 percent to $24.16.
Barclays also said it has held talks about the sale of iShares, the exchange-traded funds unit, though no decision on the sale of any assets has been made.
GE’s ‘Negative Catalysts’
General Electric advanced 48 cents to $10.10 after UBS removed its short-term sell rating on the shares. Now that GE has cut its dividend and lost its AAA credit rating at Standard & Poor’s, UBS analyst Jason Feldman said the likelihood of other “negative catalysts” is lower.
Discover Financial Services rose 2.6 percent to $6.39 after the credit-card company announced that it got $1.2 billion in cash from the Treasury to boost liquidity. Discover follows rival credit-card lender American Express Co. in becoming a bank so it could gain access to federal rescue funds.
U.S. Treasury Secretary Timothy Geithner said he will soon announce details of his plan to help banks clean up the non- performing assets that are clogging the financial system.
“We’re going to move quickly to lay out a new financing program to deal with these legacy assets,” Geithner said in an interview with Bloomberg Television two days ago during the G-20 meeting in Horsham, England.
