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The North American stock market turned upside down on Tuesday, with financial stocks – the big drags amid the current round of volatility – posting impressive gains after investors grabbed the most beaten up shares and sent them skyward.
The Dow Jones industrial average closed at 11,384.21, up 152.25 points, or 1.4 per cent. The broader S&P 500 closed at 1273.70, up 21.39 points, or 1.7 per cent. Financial stocks rose the most in more than three months.
Part of the buying enthusiasm stemmed from comments from the regulator for Fannie Mae and Freddie Mac, which suggested that the mortgage finance companies will probably not have to raise billions of dollars in capital, as some investors had feared. Fannie Mae and Freddie Mac shares rose 11.9 per cent and 13 per cent, respectively.
But the gains were widespread among financial stocks, after Ben Bernanke, the Chairman of the U.S. Federal Reserve, suggested the central bank would do what it could to support the financial system. Generally, this year's worst performers benefited the most: Bond insurer MBIA Inc. surged 21.7 per cent and Washington Mutual Inc. rose 16.8 per cent. Even the giants of the investment banking sector jumped higher, with Bank of America Corp. rising 9.3 per cent and Citigroup Inc. rising 6 per cent.
In other news, Alcoa Inc. began the second-quarter earnings season with results that beat analyst expectations. The shares rose 3.5 per cent in after hours trading.
In Canada, the S&P/TSX composite index closed at 13,809.77, up 96.97 points, or 0.7 per cent. Financials performed fine, with Manulife Financial Corp. rising 4.3 per cent and Bank of Nova Scotia rising 2.3 per cent. As well, Potash Corp. of Saskatchewan Inc. went on a wild ride, swinging $18 a share from its low to its high; it ended the day up 3.8 per cent.
But Canada's benchmark index was clearly weighed down by crude oil, which slipped to $136.04 (U.S.) a barrel, down $5.33, or 3.8 per cent. Canadian Natural Resources Ltd. slipped 3.8 per cent.
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Wuggy Tree from Canada writes: The financial industry is setting up its clientele for yet another massive sucker punch later this year. What a bunch of lying scum. On the other hand, what a bunch of chumps the clients are.
- Posted 08/07/08 at 6:38 PM EST | Alert an Editor | Link to Comment
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frank van veen from Canada writes: Generally, a "run on the banks" is used to indicate panic selling of bank stocks. Your headline was very confusing.
- Posted 09/07/08 at 6:21 AM EST | Alert an Editor | Link to Comment
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