Dow soars to record as credit worries ease

NEW YORK – US stocks surged on Monday, sending the Dow to a record close on the first day of the fourth quarter, as investors bet that Wall Street may have seen the worst of the credit squeeze after three global banks detailed expected losses from the crisis.

The surge lifted the Nasdaq to its highest level in more than six and a half years as investors snapped up shares of technology bellwethers such as Apple Inc and Intel Corp. Citigroup Inc warned that its third-quarter profit would fall by 60 per cent, but investors took comfort after its chief executive, Charles Prince, said the largest US bank would “return to a normal earnings environment in the fourth quarter.”Its shares were among the biggest gainers on both the Dow and the S&P 500, rising 2,3 per cent to US$47,72.Analysts said Citigroup’s announcement, which coincided with similar warnings from Swiss banks UBS AG and Credit Suisse Group, suggested the losses that banks are taking from subprime mortgages and other risky loans will not have a lasting impact on the financial sector.”The piece of news that caused me to believe that companies are going to handle this (credit squeeze) well was Citigroup taking a very aggressive stance on re-pricing their portfolio,” said Ernie Ankrim, chief investment strategist for Russell Investment Group in Tacoma, Washington.”I think this is the way we can expect financial institutions to go forward.”The Dow Jones industrial average finished up 191,92 points, or 1,38 per cent, at 14 087,55.During the session, it surged to an all-time high of 14 115,51.Monday’s close marks the index’s 33rd record finish in 2007 and its 55th since it began a record-setting streak about a year ago.The Standard & Poor’s 500 Index gained 20,28 points, or 1,33 per cent, to end at 1 547,03.The Nasdaq Composite Index closed up 39,49 points, or 1,46 per cent, at 2 740,99, after hitting its highest level since February 2001.Expectations of more interest rate cuts by the Federal Reserve, along with a drop of more than US$1, or nearly two per cent, in crude oil prices, also buoyed investors.Nampa-ReutersCitigroup Inc warned that its third-quarter profit would fall by 60 per cent, but investors took comfort after its chief executive, Charles Prince, said the largest US bank would “return to a normal earnings environment in the fourth quarter.”Its shares were among the biggest gainers on both the Dow and the S&P 500, rising 2,3 per cent to US$47,72.Analysts said Citigroup’s announcement, which coincided with similar warnings from Swiss banks UBS AG and Credit Suisse Group, suggested the losses that banks are taking from subprime mortgages and other risky loans will not have a lasting impact on the financial sector.”The piece of news that caused me to believe that companies are going to handle this (credit squeeze) well was Citigroup taking a very aggressive stance on re-pricing their portfolio,” said Ernie Ankrim, chief investment strategist for Russell Investment Group in Tacoma, Washington.”I think this is the way we can expect financial institutions to go forward.”The Dow Jones industrial average finished up 191,92 points, or 1,38 per cent, at 14 087,55.During the session, it surged to an all-time high of 14 115,51.Monday’s close marks the index’s 33rd record finish in 2007 and its 55th since it began a record-setting streak about a year ago.The Standard & Poor’s 500 Index gained 20,28 points, or 1,33 per cent, to end at 1 547,03.The Nasdaq Composite Index closed up 39,49 points, or 1,46 per cent, at 2 740,99, after hitting its highest level since February 2001.Expectations of more interest rate cuts by the Federal Reserve, along with a drop of more than US$1, or nearly two per cent, in crude oil prices, also buoyed investors.Nampa-Reuters