Stocks Rally, Led by Financial Companies
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American stocks rallied the most in two months on speculation lower borrowing costs and a plan to bail out bond insurers will restore confidence in the financial system.
Citigroup Inc., JPMorgan Chase & Co., and Bank of America Corp., the largest American banks, helped the Dow Jones Industrial Average erase a 326-point loss and sparked the biggest advance in financial shares in five years. Centex Corp. and D.R. Horton Inc. led a gauge of homebuilders to its steepest gain since at least 1994 on expectations the Federal Reserve’s surprise 0.75 percentage point rate cut Tuesday will spur construction.
“The volatility will continue,” the president of RNC Genter Capital Management in Los Angeles, Dan Genter, said. “People are trying to digest that we’re in an earnings recession, but they’re also realizing it’s not the end of the world and we’re probably going to come out of this.”
