Tuesday, Dec 16, 2008
U.S. stocks rose, recouping yesterday’s losses, on speculation the Federal Reserve will cut its main interest rate to a record low and inject credit markets with cash to halt the worst recession in a quarter century.
General Electric Co. and Citigroup Inc. added more than 2.3 percent as traders bet the Fed will cut its benchmark rate to as low as 0.25 percent. General Motors Corp. rose as much as 4.2 percent on optimism the Treasury will adopt a plan to save the car industry, while Goldman Sachs Group Inc. gained 7.8 percent even after posting a wider-than-estimated loss.
The Standard & Poor’s 500 Index added 1.5 percent to 881.89 at 10:31 a.m. in New York. The Dow Jones Industrial Average gained 90.08 points, or 1.1 percent, to 8,654.61. The Russell 2000 Index of small U.S. companies increased 2.1 percent. The Fed’s Open Market Committee will announce its decision on interest rates and monetary policy at around 2:15 p.m. in Washington.
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“The Fed, the Treasury, as well as all the other agencies out there, are really committed to making sure there’s liquidity put into the system,” Robert Weissenstein, who oversees $125 billion as chief investment officer for the Americas at Credit Suisse Group AG’s private banking unit in New York, told Bloomberg Television. “That’s really the best they can do.”
The Fed’s announcement comes after simultaneous recessions in the U.S., Europe and Japan dragged the S&P 500 down almost 45 percent from its 2007 record and sent benchmark indexes from Brazil to Bangkok into bear markets. Policy makers have reduced the target rate for overnight lending between banks from 5.25 percent with nine cuts over the past 15 months.
This article was posted: Tuesday, December 16, 2008 at 11:43 am