Stocks rallied sharply to finish at their best levels Wednesday after global central banks announced a plan to support the global financial system, a handful of better-than-expected economic reports and China said it would loosen monetary policy.
The Dow Jones Industrial Average surged more than 450 points to close above the psychologically-important 12,000 level, led by Caterpillar and JPMorgan. The blue-chip index is back in positive territory for 2011.
The S&P 500 and the Nasdaq also finished sharply higher. The Dow and S&P are on track to post their best weekly point gains in almost three years.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, tumbled to trade below 28 for the first time since early November.
All 10 S&P sectors closed firmly in positive territory, led by financials and materials.
The world’s major central banks including the ECB, Federal Reserve, Bank of England and the central banks of Canada, Japan and Switzerland agreed to coordinated action to ease the increasing strains on the global financial system.
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One Response
If you go to mall, and hand out free cash to those entering the mall, it will increase demand. That is what the central banks did. They starting up their printing presses and gave free money to the banking system, and of course it has to do somewhere. And stocks are the best somewhere for it to go (second choice, make sure the bankers get their year-end bonuses which had been endangered).
Corporate welfare- great is you get it.
Eventually the free money will have a negative effect on the world’s economy, but they hope it won’t be for a few years (at least, not until they have avoided the threat of a “Tea party” ending their party).