Stocks surged today, with the major U.S. indexes posting the best one-day percentage gain so far this year, lifted by Citigroups statement it is experiencing its best quarter since 2007 and by Federal Reserve Chairman Ben Bernankes expectations of a U.S. economic recovery this year.
The Dow Jones industrial average closed up 379.44, or 5.8%, at 6,926.49; the S&P 500 rose 43.07, or 6.37%, closing at 719.60; and the Nasdaq composite was up 89.64, or 7.07%, to close at 1,358.28. All numbers are preliminary.
We are profitable through the first two months of 2009 and are having our best quarter-to-date performance since the third quarter of 2007, Citigroup CEO Vikram Pandit wrote today in a memo to the banks staff, which was filed with the SEC.
Citigroup shares, which had dipped below $1 Monday, were up 36% in late trading, leading the financial sector higher, including Bank of America, up 25%. The Financial Select Sector exchange-traded fund or XLF gained 14%. Financials had been under heavy selling pressure since Feb. 27, due to renewed fears about Citigroups viability.
The market perception of default risk among the largest over-the-counter derivatives market-makers hit all-time highs on Monday as concern over capital adequacy and growing uncertainty over solvency, said Tim Backshall, chief credit derivatives strategist for consultancy Credit Derivatives Research.
In Washington, Mr. Bernanke in a question-and-answer session following a speech to the Council on Foreign Relations told the group that, once the banking system stabilizes, there is a good chance the recession will end later this year. The Fed chief also recommended the creation of a super market regulator to address the issue of systemic risk.