Stocks End Historic Week With Solid Gains
Updated from 4:12 p.m. EDT
U.S. stocks roared higher Friday following reports that the government was creating a sweeping fix for the financial crisis. A moratorium on short-selling by the Securities and Exchange Commission lent additional support to the rally.
The Dow Jones Industrial Average jumped 368.75 points, or 3.4%, to 11,388.44, and the S&P 500 gained 48.48 points, or 4%, to 1254.99. The Nasdaq added 74.80 points, or 3.4%, to 2273.90.
Despite large daily swings all week, the major indices were mainly unchanged for the week. The Dow was down 0.3%, the S&P 500 was up 0.1% and the Nasdaq tacked on 0.6%.Financial stocks were off to the races Friday. Names including Washington Mutual (WM), Wachovia (WB), Citigroup (C) and Morgan Stanley (MS) were all showing sizable double-digit gains. WaMu finished the day up 42% to $4.25, and Wachovia surged 29% to $18.75. Citi tacked on 24% to $20.65, and Morgan Stanley finished up 21% to $27.21. Early Friday, the Treasury said it would offer $50 billion from its Exchange Stabilization Fund to insure money-market mutual funds. A number of such funds have lately been under fire thanks to investment in bad debt from bankrupt Lehman Brothers and flailing insurer AIG (AIG). The Federal Reserve also said it would build on its liquidity programs to assist money-market funds, by taking steps that include buying short-term debt issued by Fannie Mae (FNM), Freddie Mac (FRE) and the Federal Home Loan Banks. Speaking at a press conference Friday morning, Treasury Secretary Henry Paulson said that government-sponsored entities Fannie Mae and Freddie Mac would continue to buy mortgage-backed securities and support the mortgage market. He also said that the Treasury will expand its program to purchase mortgage-backed securities. He said that the cost of government intervention would reach the hundreds of billions of dollars and the administration would work over the weekend to iron out details of the plan.
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