Stocks open higher after Wednesday's rout
NEW YORK -- Stocks jumped today after the previous session's massive rout, but safe assets such as gold and Treasury bills still saw heavy demand as investors braced for more instability in the financial system.
Following the bailout of insurer American International Group Inc., the Federal Reserve and other major central banks around the world on Thursday joined forces to inject as much as $180 billion into global money markets in an attempt to keep the credit crisis from worsening. The Fed added another $55 billion in overnight loans Thursday.
But fears have not fully receded. Market participants are still trying to determine how to proceed in what is looking to be the most troubling period for the world's financial system in most investors' memory.
The big fear on Wall Street is that there are more significant financial companies to fall. Speculation is swirling about the futures of such major players as thrift bank Washington Mutual Inc. and investment bank Morgan Stanley. Media reports have been saying that Wells Fargo & Co. and Citigroup Inc. are interested in a possible takeover of Washington Mutual, and that Morgan Stanley and Wachovia Corp. are in talks about a possible combination.
In the first hour of trading, the Dow Jones industrial average rose 135.65, or 1.28 percent, to 10,745.31.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 20.98, or 1.81 percent, to 1,177.37, and the Nasdaq composite index rose 37.13, or 1.17 percent, to 2,135.98.
Monday's 504-point loss in the Dow was its biggest drop since the drop following the September 2001 terror attacks. The blue-chip index is now about 24 percent below its Oct. 9, 2007, record of 14,164.53.
On Wednesday, the 3-month Treasury bill -- considered one of the safest short-duration assets -- saw demand surge so high that its yield briefly dipped into negative territory for the first time since 1940.
In early trading Thursday, the prices for short-duration Treasurys dipped from Wednesday's levels. But the yield on the 3-month T-bill was still extremely low at 0.14 percent -- up from 0.1 percent late Wednesday, but well below its yield of 1.60 percent just a week ago.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.43 percent in early Thursday trading from 3.42 percent late Wednesday.
