Stock Surge on Potential Rate Cut, Countrywide Buyout
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American stocks posted their first back-to-back gains of the year after the chairman of the Federal Reserve, Ben Bernanke, signaled he may cut interest rates further and investors speculated Countrywide Financial Corp. will be bought. Countrywide climbed the most since at least 1982. Bank of America Corp. is in talks to acquire the largest American mortgage company, a person with knowledge of the discussions said. JPMorgan Chase & Co., Wells Fargo & Co., and Citigroup Inc. led financial firms to the biggest gain in a month as traders increased bets that the Fed will reduce its benchmark lending rate by a half point when it meets January 30. The possibility Countrywide will be bought “suggests a bottom in financial shares,” the chief investment officer at New Amsterdam Partners Michelle Clayman said.
