7 Feb 2009

Stimulus, bank rescue hopes boost Wall Street

11:14 am on 7 February 2009

Stocks in the United States rallied for a second day on Friday on hopes a forthcoming stimulus package and a bank rescue plan will bolster the economy.

Investors anticipate a plan scheduled to be announced on Monday by Treasury Secretary Timothy Geithner will shore up the balance sheets of banks and spur lending.

The Senate is trying to craft a stimulus package, with moderate senators trying to trim the price tag of $US937 billion.

The Dow Jones industrial average rose 217.52 points, or 2.7%, to 8,280.59.

Standard & Poor's 500 Index gained 22.75 points, or 2.69%, to 868.60. The Nasdaq Composite Index was up 45.47 points, or 2.94% , at 1,591.71.

For the week, the S&P 500 was up 5.2%, the Dow rose 3.5% and the Nasdaq saw its best week since early December, up 7.8%.

However, a report showed U.S. payrolls fell in January by the most since December 1974 as the recession deepened, sending the unemployment rate up to 7.6%.

Financial shares rose in anticipation of Monday's details. Bank of America jumped 26.7% to $US6.13 a day after falling to its lowest level since 1984 on investor fears it would have to be nationalized.

However, in an interview with CNBC, chief executive Kenneth Lewis said "categorically" that the bank did not need more money from the government and does not expect to be nationalized.

JPMorgan Chase climbed 12.6% to $US27.63.

The tech sector also rose: Apple was up 3.4% at $US99.72, and BlackBerry maker Research In Motion rose 4.2% to $US59.17.

Trading was active on the New York Stock Exchange, with about 1.61 billion shares changing hands - above last year's estimated daily average of 1.49 billion.

About 2.43 billion shares were traded on the Nasdaq - above last year's daily average of 2.28 billion.