U.S. equities rallied today as the Dow Jones industrial average rose for the third straight session, topping the 7,000 mark on good news related to three of its worst-performing components: Bank of America, General Electric and General Motors.
The Dow closed up 239.66, or 3.46%, at 7,170.06; the S&P 500 rose 29.38, or 4.07%, closing at 750.74; and the Nasdaq composite was up 54.46, or 3.97%, to close at 1,426.10. All numbers are preliminary.
The last time the two main U.S. indexes had a three-session winning streak was Jan. 26-28 for the Dow and Feb. 5-9 for the S&P.
GE kicked off the rally in the morning as Standard & Poor’s lowered GE’s long-term debt rating to AA+ from AAA but switched the outlook to “stable” from “negative,” putting to rest investors’ fears of further downgrades.
Also, General Motors said it does not need an additional $2 billion in government aid this month to survive, and BofA CEO Kenneth Lewis said the largest U.S. bank was profitable in the first two months of this year.
From Dec. 31 through the close on Wednesday, GE shares had lost 38.7%; GM, 43.7%; and BofA, 56.7%.
Also today, the Commerce Department said retail sales fell in February by a smaller-than-forecast 0.1% and were up 0.7% when auto sales were excluded.
In Washington, James Kroeker, acting SEC chief accountant, recommended to the House Financial Services subcommittee on capital markets that the “fair value” or mark-to-market accounting “should be improved, but not suspended,” and that the “accounting for financial asset impairments should be readdressed,” which could alleviate the strain on financial institutions.
“No one thinks that the markets for these derivatives securities are being priced right,” said Robert Brusca, chief economist at consultancy FAO Economics.
