Stocks Ride Bailout Hopes Higher
09/25/08 - 01:24 PM EDT
Mike Taylor
Updated from 11:46 a.m. EDT
Stocks in New York were climbing Thursday as the prospect of a quick bailout for financial firms trumped a gloomy earnings forecast from General Electric (GE Quote - Cramer on GE - Stock Picks) and discouraging economic data. The Dow Jones Industrial Average was up 246 points at 11,071, and the S&P 500 climbed 29 points to 1214. The Nasdaq added 45 points to 2201. On Wednesday, the three major indices finished narrowly mixed after a day of erratic trading. Investors were focused on Treasury Secretary Henry Paulson's $700 billion bailout plan for the financial sector. Buyers were encouraged by an afternoon announcement from lawmakers that they have now reached a tentative agreement to put the bailout plan in place, though specifics weren't revealed. However, Sen. Chris Dodd (D.-Conn.), the chairman of the banking, housing and urban affairs committee, said the measure would have provisions to protect taxpayers. Speaking Wednesday evening in Washington, D.C., President Bush called for a quick approval of the Treasury's plan and warned that the economy would face a recession if the package were not approved. Bush called an emergency meeting with presidential candidates John McCain and Barack Obama, as well as certain other members of Congress, to work out a plan to pass the bill. After Bush's speech, Rep. Barney Frank, chairman of the House Financial Services Committee, told CNBC that he believed the bill would pass. "This crisis could result in a deflationary period, and that obviously would mean a prolonged, serious -- not recession, but depression," said Peter Cardillo, chief market economist at Avalon Partners. However, the plan is not without a price tag, he said. "It means the printing presses at Treasury will be running on full cylinders," said Cardillo, which means inflation remains a concern, "but it's the lesser of the two evils."
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