The $700-billion (U.S.) bailout out plan that is on the verge of being approved by lawmakers in the United States, perhaps as early as this weekend, might be an embarrassment for capitalists who have long opposed government intervention. But, so far at least, the stock market approves.
The only potential snag comes from a question being asked by investors: Now what?
The Dow Jones industrial average closed at 11,022.06, up 196.89 points or 1.8 per cent - although skeptics will note that the index was actually about 50 points higher before the bailout received tentative approval. The broader S&P 500 closed at 1209.21, up 23.34 points or 2 per cent.
The 85-member S&P 500 financials index rose 2.6 per cent - though down about 2 per cent from its intraday high - with big gains from JPMorgan Chase & Co., up 7.3 per cent, Bank of America Corp., up 3.9 per cent and Bank of New York Mellon Corp., up 9 per cent.
Elsewhere, gains were made by an eclectic group of stocks. General Electric Co. shook off an earlier loss after it lowered its earnings forecast for the year, rising 4.4 per cent by the end of the day. International Business Machines Corp. rose 3.1 per cent, Home Depot Inc. rose 3.1 per cent and Coca-Cola Co. rose 2.5 per cent.
In Canada, the S&P/TSX composite index closed at 12,546.51, up 33.15 points or 0.3 per cent. Financials rose 1.4 per cent, led by insurance companies. Manulife Financial Corp. rose 2.4 per cent and Sun Life Financial Inc. rose 6.7 per cent.
The commodities scene was mixed after the price of oil rose $2.29, to $108.02 a barrel, and gold fell $13, to $882 an ounce. Among energy producers, EnCana Corp. rose 2.5 per cent and Suncor Energy Inc. rose 2.7 per cent. Barrick Gold Corp. fell 5.6 per cent.
Meanwhile, Research In Motion Ltd. ended the day up 0.6 per cent, just before the BlackBerry maker released second-quarter results that fell a penny shy of analyst expectations. RIM said that sales rose 88 per cent, to $2.6-billion after it signed up an additional 2.6 million subscribers during the quarter. Its earnings rose to $495.5-million, or 86 cents a share. Analysts had been expecting a profit of 87 cents a share.
Perhaps most troubling for a market that is growing concerned about economic conditions, RIM forecasted that earnings in the third quarter would be in the range of 89 cents to 97 cents a share - below expectations for earnings of 99 cents. RIM shares fell 14 in after market trading.
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