Stocks Rally As Oil Drops, Banks Surge
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American stocks rallied, pushing the Dow Jones Industrial Average up 127 points in the last hour, after Deutsche Bank AG said financial companies are overcoming credit losses and a drop in oil stoked a record gain in airlines.
Wachovia Corp., Bank of America Corp., and SunTrust Banks Inc. helped lenders extend their rebound from last week’s nine-year low to 28% after Deutsche Bank analyst Mike Mayo said bank losses haven’t spread as “much as feared.” UAL Corp., parent of United Airlines, surged the most since emerging from bankruptcy in 2006 as oil slid to a six-week low.
Wachovia climbed 27% to $16.79. The chief executive officer, Robert Steel, plans to cut the $2 billion in expenses by the end of next year. Washington Mutual Inc. added 34 cents to $5.82. After the close, the bank reported a $3.3 billion quarterly loss and forecast $1 billion of annual costs savings mainly from closing wholesale and home loan centers.
