Bush administration officials said yesterday that they will move soon on the $700 billion rescue program. Officials said they were consulting with law firms about the mechanics of buying ownership shares in a large number of banks to help revive the stagnant credit markets and, in turn, get the economy moving again.
Even with yesterday's gains, U.S. investors continue to see their portfolios suffer. The Dow is down 29 percent for the year; the S&P and Nasdaq are down 32 percent and 30 percent respectively.
Kroneberger noted that investors were heartened in part by Morgan Stanley's ability to seal a $9 billion investment from Japan's Mitsubishi UFJ Financial Group Inc.
Morgan Stanley shares, which had plunged 60 percent last week, gained $8.42, or 87 percent, to $18.10.
Brooks, of Price, said Goldman Sachs also rebounded with a 25 percent gain to $111 yesterday.
"Those are two bellwether financial firms, and as very important broker dealers ... it's very good to see them responding so positively today," said Brooks of Goldman Sachs and Morgan Stanley.
Recapitalizing banks
Several European governments, including Britain, Germany, France, the Netherlands, Spain, Portugal and Austria, put $2.3 trillion on the line to protect their banks.
About $341 billion of the European pledges was earmarked to be spent on recapitalizing banks by buying stakes.
"There seems to be some perception that maybe we're moving in the right direction, certainly with the actions of various G7 countries," said Douglas G. Ober, chairman and chief executive of closed-end mutual funds Adams Express Co. and Petroleum & Resources Corp. in Baltimore.
"Although it wasn't a single concerted action worldwide, they all seem to be moving parallel with each other, including the U.S., although more slowly than the others.
"Nonetheless, this has the possibility of beginning to resolve the problems of capital adequacy in the banks and, subsequent to that, the ability of short-term credit markets to open up a little bit."
Treasury Secretary Henry M. Paulson Jr. met yesterday in Washington with the heads of the five biggest U.S. banks to discuss the rescue plan, the Associated Press said, according to people briefed on the matter.
Neel Kashkari, the assistant Treasury secretary who is interim head of the bailout program, said in a speech yesterday that officials were also developing guidelines to govern the purchase of soured mortgage-related assets.
