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Citi outlook sparks explosive Wall Street rally

Citi outlook sparks explosive Wall Street rally

An explosive rally propelled Wall Street higher Tuesday after troubled banking giant Citigroup's upbeat profit outlook and encouraging comments from Washington prompted a stock-buying frenzy.
The Dow Jones Industrial Average vaulted 379.44 points (5.80 percent) to close at 6,926.49, as blue chips rebounded strongly from 12-year lows Monday.
The tech-dominated Nasdaq leapt 89.64 points (7.07 percent) to 1,358.28 while the broad-market Standard & Poor's 500 index rallied 43.07 points (6.37 percent) to 719.60.
The rebound came after an internal memo showed struggling U.S. banking giant Citigroup is seeing a return to profitability in early 2009 after punishing losses last year.
Chief executive Vikram Pandit said Citi has been profitable for the first two months of 2009 and was having its "best quarter-to-date performance since the third quarter of 2007."
"Wall Street was in dire need of some good news, and Citigroup delivered," said Joseph Hargett at Schaeffer's Investment Research.
Others noted that the market was encouraged by Federal Reserve chairman Ben Bernanke's calls for tighter regulation of financial markets and comments from a key lawmaker indicating regulators would tighten up a loophole that allows speculators to drive down share prices.
"Bernanke announced a new rule book will be written for the financial world," said Tom Lydon, president of Global Trends Investments. He said the market also brightened on indicators regulators would restore the so-called "uptick rule" that prevents speculators from piling on to short positions as a stock is falling.
"Citigroup's positive comments about the first two months of 2009 reminds (the market) that even with investment banking being decimated, banks will produce revenue."," said Manus Cranny, senior market commentator at MF Global Spreads.
But other analysts urged caution, with Yves Marcais of Global Equities contending that there was "no particular reason for the gain."
Among key U.S. stocks, Citigroup led the gains with a surge of 38 percent to US$1.45, after hovering near the US$1 mark in recent days.
Elsewhere in the financial arena, Bank of America rallied 27.7 percent to US$4.79, JPMorgan Chase added 22.6 percent to US$19.50 and Wells Fargo advanced 18.5 percent to US$11.64.


Updated : 2021-03-08 21:41 GMT+08:00