Wall Street on Tuesday, unleashing a breathtaking scholarship Rally investors that left a little dizzy, but had many experts warning that the rally, as before being so many, could falter as fast as it started .After months of demoralizing losses, investors finally have an idea of what they so desperately craved - a glimmer of good news in the financial industry - from none other than Citigroup, the largest and most troubled of the nation’s troubled large banks.In a memorandum sent to Citigroup employees on Monday night, Vikram S. schoolteacher, Citigroup’s beleaguered executive, said that after more than a year of loss location and three rescues from Washington, the giant financial company was again , to make money. Citigroup, he said, was on track for its strongest quarter since late 2007, when waves of bad loans and trading losses began to crash down the company. But some analysts saw it at the end of problems at Citigroup and other financial companies. Indeed, many predicted that Citigroup and other banks will suffer further losses as the recession deepened. Given the precarious state of the global economy, even optimists have been reluctant to call an end to bear market.“We are poor investors, we do not need much to make us happy, I was beaten so hard,” said Ed Yardeni, president of Yardeni Research. “At this point, we’ll take what we get.”
So, for a day at least a hint of good news was enough. The Dow Jones industrial average rose 379.44 points, or 5.8 percent, to 6926.49, the largest one-day gain in this year and the biggest since World War II. The broader Standard & Poor’s 500 Index of stocks rose 43.07 points, or 6.37 percent, to 719.60, the Nasdaq composite index rose 89.64 points, or 7.07 percent, to 1358.28.
Battered financial shares pace of earnings. Citigroup share price, in short, which sank below $ 1 last week, rose 40 cents, to $ 1.45. Other banks big and small post similar gains.
But the gate insisted that despite Rally, nothing really changed. Investors’ hopes, the skeptics argued, were displaced. Since last October, the Dow has five stages of the biggest one-day rallies in postwar history, only to falter again and sink to new lows .
Even after Tuesday gains, the Dow and S. & P. 500 were down more than 20 percent this year, and shares of financial companies were more than 40 percent lower.
But for traders, to the green screens offered a welcome relief from the relentless torrent of red as stocks churned steadily lower from last month, long-term financial markets to their most low levels of about 12 years.
“Volatility breeds a lot of nervousness, and nervousness breeds opportunity,” said Anthony Conroy, head equity trader at BNY ConvergEx Group. “It was a way to trade for so long, and it seems that we’re turning here.
Federal Reserve chairman, Ben S. Bernanke, added to the optimism of the day call for broader reforms in the financial regulatory system, including a review of accounting rules governing how companies value their assets.
Mr. Bernanke, speaking to the Council on Foreign Relations, said he did not support suspending mark-to-market accounting rules, in which the asset values peg at current market prices. But he said he supported a review to ensure that weaknesses in the rules, have been identified and fixed.
“In addition to revising the accounting standards governing the assessment and loss provisioning would be useful and could lead to changes in accounting rules,” he said in his speech.
Investors also cheered signals to lawmakers and the Securities and Exchange Commission officials were poised to restore the uptick rule, which is intended to slow the short-selling. The rule was lifted in 2007, and critics have said her absence has contributed to the breathtaking pace of declines in the prices of shares.
But the main catalyst was the news from Citigroup, which, with high investment and banking operations in more than 100 countries, is viewed as a proxy for the broader banking industry. Mr. schoolteacher in his memory, which took place a few rays of hope.
“I, like you, am disappointed with the current price range of basic and misperceptions about our financial position,” said Mr schoolteacher. But Citigroup, he said, was financially sound, its strong business and relatively stable deposits.
“Over time, markets will recognize the many strengths of Citi,” said Mr schoolteacher.
For Citigroup, a major question is whether it can generate sufficient revenues to resist expected losses in November. Citigroup could still support 55.5 billion dollars in additional markdowns in the next 18 months, according to a recent analysis CreditSights.
In memory of Mr. schoolteacher reported that Citigroup could absorb these losses. He said the bank was profitable in January and February, when it generated a combined 19 billion dollars in revenue due to strong trading results and fatter margins credit.
Many analysts were skeptical. Citigroup profits could be temporary if the global economy worsens substantially.
“Citi is not the forest. It is certainly good news that Citi is profitable, but I would not overplay the point.” Said Michael Mayo, financial services, an analyst at Deutsche Bank. “They still write-downs and an increase in problem assets, and they are still dependent on the regulatory authorities on what they do.”
Indeed, regulators are currently conducting “stress tests” for Citigroup and 18 other major banks to assess the depths of their problems, and while Mr teacher said he was confident that Citigroup was adequately capitalized Many analysts question whether the company will need a government rescue. Also hanging in the balance is whether a plan to be supported by government investment funds to buy up toxic assets from banks can obtain from the ground.
But, given the steep decline of late, it does not entirely surprising to see stocks rebound sharply, if only for a short period of time.
“When stocks have been battered as much as they have not so much to take good news to move them forward,” said Marc Stern, chief investment officer at Bessemer Trust. “This is not a green light for investors, but the tone is much more constructive now.”
As investors surged back into stocks, gold prices retreated to a mere $ 900 an oz and the price certainly have Treasury debt fell again as the 10-year yield has risen from 3 percent grade.
Following are results of Tuesday’s Treasury auction for four weeks and 52 weeks of bills and notes for three yearsARTICLES MODERN
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