U.S. stocks surge in early trading after Fannie Mae, Freddie Mac takeover
The Dow Jones industrial average was up nearly 350 points, but then slipped noticeably. Fannie and Freddie shares themselves took big hits.
NEW YORK — The stock market gave its initial blessing this morning to the government's takeover of Fannie Mae and Freddie Mac, launching into a robust rally that drove up shares of financial, housing and other companies that stand to benefit from a firmer mortgage market.
The Dow Jones industrial average surged almost 350 points in the opening minutes of trading, paced by gains of more than 5% each in Citigroup Inc., Bank of America Corp. and Home Depot Inc.
But as has been the pattern through much of the current bear market, stock prices slipped back noticeably afterward as some investors seized the opportunity to sell into strength.
As of 8:15 a.m. PDT, the Dow was up 206.65 points, or 1.84%, to 11,427.61. The Standard & Poor's 500 index was up 1.6% and the Nasdaq composite gained 0.4%.
The KBW bank-stock index jumped 3.1%, but had been up as much as 8.9%.
The advance built on a strong overnight rally in foreign markets that followed the Treasury Department's move on Sunday to place the housing-finance giants into conservatorship. Most markets across Europe and Asia gained between 3% to 4%.
As expected, shares of Fannie and Freddie themselves plunged. Fannie plummeted $5.85, or 83%, to $1.21, while Freddie sank $3.95, or 77.5%, to $1.15.
walter.hamilton@latimes.com
