Huge rally at Wall Street

Indices soar in the final half hour helping Dow register its highest intra day gain

In the US stock market on Monday, 13 October, the indices finished sharply higher snapping an eight session losing streak in the process. The rebound was fueled by several governments taking steps to shore up the financial system and Morgan Stanley completing its deal to receive a capital infusion from a Japanese bank. All ten sectors rose today led by the financial and the energy sector. The indices just soared in the final half hour of trading.

The Dow Jones Industrial Average ended the day down higher by 936 points, to 9,387. The Nasdaq Composite Index, finished higher by 195 points at 1,844. S&P 500 finished higher by 104 points at 1,003. The Dow registered its highest one day intra day gain. S&P 500 registered its highest one day gain in sixty nine years.

The turnaround came today after the Fed and other central banks announced plans to provide as much dollar liquidity as needed in short-term funding markets trying to put some check on the current credit crisis that has sent a turmoil across the world.

Barring GE, all the thirty Dow stocks ended in the green today led by GM and Alcoa gaining 33% and 23% respectively.

Among major events on Wall Street today, Morgan Stanley and Mitsubishi Financial confirmed the closing of a $9 billion, or 21%, investment in MS, relieving some market concerns that the deal would fall apart due to a recent plunge in shares of MS. Under the terms of the renegotiated deal, MUFG acquired $7.8 billion perpetual noncumulative convertible preferred stock at a 10% dividend and a conversion price of $25.25. Morgan Stanley shares soared 87% today.

Treasury Secretary Henry Paulson today laid out more details of his radical plans to buy equity in banks last Friday, while Group of Seven finance ministers and central bank governors urged whatever steps are necessary to restore market confidence.

The U.S. is expected to outline a comprehensive plan of its own as soon as Tuesday, 14 October, 2008 and is likely to include interbank lending and bank debt guarantees, and direct capital injections in financial institutions.

A day earlier, stocks across the Asian region had rebounded after days of losses. The gain in Asian equities was powered by the statement issued by the Group of Seven (G7) issued in its meeting in Washington DC addressing the ongoing financial crisis. According to the statement released, the G-7 agreed that the current situation calls for urgent and exceptional action. It has also decided to take all necessary steps to unfreeze credit and money markets and ensure that banks and other financial institutions have broad access to liquidity and funding.

Also, the 15 eurozone countries said they will guarantee new bank debt until the end of 2009. In addition, several European countries announced plans to guarantee interbank landing and directly inject capital in financial firms. The U.K. government plans to inject up to $63 billion in three U.K. banks.

Volume on the New York Stock Exchange topped 1.8 billion shares, with advancing stocks outgunning those on the decline by a margin of roughly 19 to 1. On the Nasdaq, nearly 1.2 billion shares traded, and advancers outclassed decliners 6 to 1.

For tomorrow, Pepsico and Johnson & Johnson are the main two companies to come out with their earning reports.