Bulls romp worldwide on surfeit of good news
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For months, investors were starved for encouraging news on the economy. Today, they’re swimming in it.
Stock markets around the globe have been on a rocket ride as antsy investors place new bets that the worst of the recession is behind us.
The rally began in Asia, where Japan’s Nikkei-225 index surged 4.4% and Hong Kong’s Hang Seng index jumped 7.4%. A report from China showed that the country’s manufacturing sector expanded in March for the first time in six months.
A wave of optimism washed over European markets as well, as investors bet on some concrete economic help from the G-20 nations’ summit meeting -- which the G-20 delivered, in the form of a $1-trillion stimulus promise mainly via International Monetary Fund lending.
Germany’s DAX stock index soared 6.1%, its biggest one-day advance since the latest market rally began March 6. Britain’s FTSE-100 jumped 4.3%.
European stocks rose even though the European Central Bank cut its key short-term interest rate less than expected, shaving it to 1.25% from 1.50%.
Once Wall Street opened, investors were ready to rumble on the G-20 news and on the government’s report that factory orders rose 1.8% in February, the first increase in seven months.
Although new claims for unemployment benefits continued to rise in the latest week, Wall Street views employment as a lagging indicator rather than a leading indicator.
Some investors also were stoked by the long-awaited decision by accounting rulemakers to give banks more latitude in determining a ‘fair value’ for troubled assets such as mortgage bonds.
With a few minutes to go in today’s session, the Dow Jones industrial average was up 230 points, or 3%, to 7,990.
A clear sign that investors want to believe the worst is over for the economy: The Dow transportation-stock index is up about 8% for the day. The transports are a classic bet on economic growth.
-- Tom Petruno