The stock market loves the idea of bailout, is uncomfortable when the arrival of a bailout looks imminent, and is downright hostile to the cancellation of a bailout. That, at least, is a reasonable summary of stock market activity in recent days as the proposed $700-billion (U.S.) rescue plan moves in and out of focus.
On Tuesday at noon, the idea of a bailout was alive and well, if for no other reason than a simple math equation is making the rounds: On Monday alone, the U.S. stock market lost more money than the bailout is worth, making the rescue plan look like a relatively small price to pay.
The Dow Jones industrial average was up 288 points, or 2.8 per cent, to 10,654. The broader S&P 500 was up 36 points, or 3.2 per cent, to 1142. Although those are handsome gains, they make up less than half of the ground lost during Monday's stock market rout when the Dow fell 778 points.
At the S&P 500, all 10 subindexes were higher, reflecting the widespread nature of the rally. Financials were in the lead, rising 8.9 per cent, energy stocks rose 4.8 per cent and information technology stocks rose 3.2 per cent. The safer stocks were the laggards, but even they enjoyed reasonable gains. Utilities rose 0.6 per cent and consumer staples rose 1.5 per cent.
In Canada, the S&P/TSX composite index performed even better. At noon, it was up 488 points, or 4.3 per cent, to 11,773, recovering nearly 60 per cent of the losses sustained on Monday.
There, too, all 10 subindexes were higher. Information technology, dominated by Research In Motion Ltd., rose 7.3 per cent, energy rose 5.9 per cent, financials rose 3.9 per cent and materials rose 3.3 per cent.