North American markets surge, cheered by news from Fed
A few reassuring words from the U.S. Federal Reserve chairman was all it took to get the stock markets rising again on Tuesday.
But what reassuring words they were: Ben Bernanke suggested the nationalization of big banks was not at hand.
Concern about that very thing had dragged the Dow and the S&P 500 to 1997 lows on Monday.
Bernanke said the significant financial value built up in the country's banks would be lost if they were government-owned. Not only that, he said the recession may not last a lot longer.
"If actions taken by the Administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability — and only if that is the case, in my view — there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery," he said.
Bank stocks surged.
Citigroup jumped 21.5 per cent , Bank of America climbed 21 per cent, and the S&P Financial index surged 11.4 per cent. The Dow Jones industrial average rose 235.76 points, to 7,350.54.
In Canada, a day after falling 302 points to levels not seen since 2003, Toronto's S&P/TSX composite index surged 211.66 points to close at 7,859.33.
The Canadian dollar rose 0.51 of a cent to 80.43 cents US.