NEW YORK — Can it last?
After suffering the worst weekly drubbing in its 112-year history, the Dow Jones industrial average leaped more than 900 points Monday -- its biggest one-day point gain ever -- as investors were encouraged by central banks' aggressive steps to shore up the global financial system.
But doubts lingered about whether the rally would have staying power, especially given the troubles afflicting global credit markets and the U.S. economy. Some fretted that it could be what Wall Street likes to call a sucker's rally -- a big gain in the midst of a bear market that gets investors' hopes up, only to dash them with further declines.
"There's just so much more that has to be remedied . . . that it's unlikely that we've hit bottom," said Bill King, market strategist at M. Ramsey King Securities in Burr Ridge, Ill. "We haven't seen the economic ramifications of all this financial destruction -- and we will."
For at least one day, though, investors had a reason to cheer. They piled into stocks after European governments emerged from a series of emergency weekend meetings to pledge guarantees for interbank lending and establish equity stakes in battered financial institutions.
Today, the U.S. government is expected to reveal details of its own plan -- first announced in broad form Friday -- to take equity positions in U.S. banks and other measures to shore up the nation's troubled financial system. Details that leaked out Monday night hinted at a European-style approach involving stronger protections, which could provide another boost for stock prices today.
On Monday, the Dow rocketed 936.42 points, or 11.1%, to 9,387.61, erasing half of last week's 18% loss. That almost doubled the widely watched average's previous one-day record gain of 499 points and marked its biggest percentage increase since the depths of the Great Depression in 1933 -- even topping its 10.2% gain two days after the infamous Black Monday crash of 1987.
On the New York Stock Exchange, winners trounced losers 19 to 1.
The rally was "an upward thrust of massive proportion that indicates to me that the market has had a huge dose of oxygen," said David Kotok, chief investment officer of money manager Cumberland Advisors in Vineland, N.J. "It's likely the market will be volatile but will head higher for the rest of the year."
