Stocks Build on Gains
Updated from 9:42 a.m. EDT
Stocks on Wall Street bounced back from Monday's heavy losses with an upside open Tuesday, as investors awaited further news on the government's historic bailout of the U.S. financial markets.
The Dow Jones Industrial Average climbed 100 points to 11,116, and the S&P 500 added 10.5 points to 1217. The Nasdaq tacked on 26 points to 2205.
On Monday, stocks suffered as traders attempted to assess the impact of Treasury Secretary Henry Paulson's sweeping bailout of financial firms. Paulson's $700 billion plan would create a government institution to buy from banks the bad debt at the core of the credit crisis.Although the plan is a welcome boon to many investment firms with hard-to-value securities on their balance sheets, fear remains that the massive government-spending increase will drive up interest rates and weaken the dollar as new government debt floods the market. Later Tuesday, Paulson and Federal Reserve Chairman Ben Bernanke are set to appear before the Senate to discuss the bailout plan. Meanwhile, investment banks Goldman Sachs (GS) and Morgan Stanley (MS) over the weekend agreed to become bank holding companies . Many have speculated about whether the big brokerages, following their transformation, will buy small regional banks to build a base of retail deposits. Following an $85 billion emergency loan from the Federal Reserve, insurance firm AIG (AIG) said it was preparing a list of properties it would sell as part of its effort to repay the government. As for corporate earnings, homebuilder Lennar (LEN) reported a fiscal third-quarter loss that narrowed year over year on sharply declining revenue.
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