Stocks Ease Off Opening Highs
10/14/08 - 10:20 AM EDT
Mike Taylor
Updated from 9:45 a.m. EDT
Stocks on Wall Street backed off from a euphoric open Tuesday, after the Treasury Department outlined a plan to invest some $250 billion in U.S. banks, with about $125 billion reportedly earmarked for the nine largest. The Dow Jones Industrial Average, up more than 400 points earlier, was lately up 145 points at 9532, and the S&P 500 was up 15 points to 1018. The Nasdaq was losing 23 points to 1821. On Monday, stocks snapped back from their eight-session October losing streak with massive gains. The Dow registered its largest-ever one-day point gain, rising 936 points, or 11%. The S&P 500 and the Nasdaq each jumped nearly 12%. The large gains came as central banks around the world collaborated on plans to inject capital into the global financial system. Ahead of the new session, Treasury Secretary Henry Paulson said his agency would dedicate $250 billion of the $700 billion bailout package to buying equity positions in U.S. banks. The government would buy preferred shares in Goldman Sachs (GS Quote - Cramer on GS - Stock Picks), Morgan Stanley (MS Quote - Cramer on MS - Stock Picks), JPMorgan Chase (JPM Quote - Cramer on JPM - Stock Picks) , Bank of America (BAC Quote - Cramer on BAC - Stock Picks), Merrill Lynch (MER Quote - Cramer on MER - Stock Picks) , Citigroup (C Quote - Cramer on C - Stock Picks), Wells Fargo (WFC Quote - Cramer on WFC - Stock Picks), Bank of New York Mellon (BK Quote - Cramer on BK - Stock Picks) and State Street (STT Quote - Cramer on STT - Stock Picks), the Journal reported. Speaking in Washington Tuesday morning, Treasury Secretary Henry Paulson said that he dislikes government ownership in U.S. financial firms but that the equity investment will help unfreeze liquidity markets and alleviate the crisis. Federal Reserve Chairman Ben Bernanke praised Paulson's plan, and FDIC Chair Sheila Bair said that additional insurance of deposits in banks would also boost confidence in the financial system. Action in the money markets suggested the international relief effort may have been gaining traction against the credit crunch. Bloomberg reported that three-month dollar Libor, a measure of the rate banks charge one another for large loans, declined 12 basis points to 4.64%. The overnight rate lost 29 basis points to 2.18%.
RSS
