The government plan for Citigroup (C: 5.95, +2.18 (+57.82%)) gave Wall Street something positive to think about as markets went north today. The Dow closed out Monday at 8443 points, and nearly rose 400 points. The Nasdaq closed at 1472 points after rising 87 points on the day. The S&P 500 finished at 850 points, and gained 51 points. These increases come after huge gains of around 6% from each major index on Friday. In international trading, Britain’s FTSE 100 went up 9.84%, while Japanese markets were closed due to a holiday.
The government bailout of Citi will consist of $20 billion to be invested directly into the bank and $360 billion for investment in risky assets. Current President George W. Bush has been involving President Elect Barak Obama during the formation of the plan, and both feel that a success here could very much help the broader financial sector.
Essentially with this new decision, it is clear the government acknowledges Citi as simply being too big to fail. Shares of Bank of America (BAC: 14.59, +3.12 (+27.20%)), Morgan Stanley (MS: 13.38, +3.33 (+33.13%)), and Goldman Sachs (GS: 67.42, +14.11 (+26.47%)) enjoyed huge climbs in share prices as news of the aid for a fellow bank spread optimism.
The 10-year Treasury note yield rose to 3.36% from 3.20%, showing signs that some investors had possibly moved back into the stock market.
Shares of AT&T Inc. (T: 26.94, +1.75 (+6.95%)) shot up 7% today, while rival Verizon Communications Inc. (VZ: 29.73, +1.26 (+4.43%)) also went up 4.4%. The year hasn’t been too kind for either as both have been down over 30%.
In other news, the dollar was mostly lower against other major currencies. Oil went up $4.61 to $54.54 on the NYMEX, while gold prices rose by $29 to finish at $822.
-Hassan Chaudhry
Disclosure- The fund the aither is associated with holds a long position with GS and T.
