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Enthusiastic investors send Dow above 8,000

April 02, 2009

NEW YORK (AP) -- Investors are buying up stocks again, sending the Dow Jones industrials above the 8,000 mark for the first time in nearly two months.

All the major indexes soared about 4 percent on Thursday as optimism grew following more signs that the economy is on the mend.

Financial stocks led the rally, getting a big boost after the Financial Accounting Standards Board relaxed accounting rules forcing banks to value their assets at current prices. The change should help banks reduce losses.

Another positive indicator on the economy also lifted Wall Street sentiment. Factory orders posted a large increase in February, coming on the heels of better-than-expected readings on pending home sales, manufacturing activity and auto sales the day before.

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"Everyone is in a buying mood," said Eric Ross, director of research at brokerage Canaccord Adams. "Everyone is feeling good. ... A lot of this is simply confidence."

The change in "mark-to-market" accounting rules sends another lifeline to the troubled banking industry. Many market participants believe financial stocks, which have largely carried the market's four-week rally, are a gauge of when the economy is turning.

The market's advance came as the world's finance leaders met in London to discuss efforts to fix the global economy. The G-20 ministers plan to give the International Monetary Fund $500 billion, and create stricter rules for hedge funds.

In midday trading, the Dow rose 308.24, or 4.0 percent, to 8,069.84.

The Standard & Poor's 500 index rose 33.22, or 4.1 percent, to 844.30. The Nasdaq composite index rose 68.89, or 4.4 percent, to 1,620.49.

The Russell 2000 index of smaller companies jumped 24.18, or 5.6 percent, to 453.34.

For every three stocks that fell, nine stocks rose on the New York Stock Exchange where volume came to 642 million shares.

Since a nearly 12-year low on March 9, the Dow is up about 19 percent. While analysts have warned that the market could retest the lows hit early last month, there's no doubt a growing sense on Wall Street the economy, at least stateside, might be bottoming out.

"The market mindset is: OK, we're not in a tailspin," said Jack A. Ablin, chief investment officer at Harris Private Bank.

The market has managed to shrug off data showing that the job market remains extremely weak. On Thursday, the Labor Department reported a surprisingly large rise in last week's jobless claims, and on Wednesday, data from a research group showed a bigger-than-expected March decline in private sector employment.

The market could be in for a bad suprise Friday, however, if the closely-watched monthly employment report comes in much worse than expected. Economists currently expect the report to show a loss of 654,000 jobs in March following 651,000 jobs in February, a record third straight month of job losses above 600,000.

Investors could also get other bad news soon as first-quarter earnings start to roll in over the next few weeks. Expectations are already low, but pessimistic forecasts for the rest of the year from companies could easily unsettle the market.

Among the biggest advancers in the financial sector were Wells Fargo & Co., which jumped $1.05, or 7.3 percent, to $15.53, and Bank of America Corp., which rose 36 cents, or 5.1 percent, to $7.41. Regional banks also rose sharply.

Alcoa Inc., which rose 81 cents, or 10.7 percent, to $8.41, led gains among industrial and material companies.

Stocks are still well below their October 2007 record highs, however, and the market just finished one of its most tumultuous quarters on record on Tuesday. Investors got another dose of volatility on Monday, when stocks dropped sharply as the Obama administration raised the possibility of a U.S. automaker bankruptcy.

"It's premature to suggest that we're out of the challenges, said Richard Hughes, co-president of Portfolio Management Consultants. "But it's equally worthwhile to acknowledge that the rate of decline (in economic data) has subsided in the last 30 to 60 days."

Government bond prices slipped Thursday. The yield on the benchmark 10-year Treasury note rose to 2.75 percent from 2.66 percent late Wednesday. The yield on the three-month T-bill was flat at 0.21 percent.

The better-than-expected economic news helped drive oil prices up $3.91 to $52.30 a barrel on the New York Mercantile Exchange.

The dollar fell against other major currencies after the European Central Bank cut its key interest rate by less than expected. Gold prices fell.

Overseas markets also logged big gains. Japan's Nikkei stock average rose 4.4 percent, while Hong Kong's Hang Seng index jumped 7.4 percent. In Europe, Britain's FTSE 100 rose 4.3 percent, Germany's DAX index rose 6.1 percent, and France's CAC-40 rose 5.4 percent.

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