Stocks jump 379 points on Citigroup news

March 11, 2009|By Walter Hamilton | Walter Hamilton,Los Angeles Times

NEW YORK - Good news from a bank - finally - sent the stock market to its best gain this year.

The Dow Jones industrial average soared almost 400 points after Citigroup Inc.'s chief executive said the troubled banking company was profitable through the first two months of this year and is having its best quarter since the third quarter of 2007.

"I am most encouraged with the strength of our business so far in 2009," Vikram Pandit, Citigroup's CEO, wrote in a memo to employees.

That raised hope that the financial sector could be nearing a bottom, and it unleashed a broad rally among financial stocks. Citigroup shares jumped more than 36 percent - though with the shares starting the day at just $1.05, that amounted to only a 38-cent gain.

Bank of America Corp. shares ballooned 26 percent, and JPMorgan Chase & Co. surged 22 percent.

The Dow ended up 379.44 points, or 5.8 percent, at 6,926.49. The Standard & Poor's 500 index jumped 43.07 points, or 6.4 percent, to 719.60. The Nasdaq composite index led the way, leaping 89.64 points, or 7.1 percent, to 1,358.28.

Investors also were buoyed by comments from Federal Reserve Chairman Ben S. Bernanke indicating that the Federal Reserve was looking into accounting rules for illiquid assets, raising hope that banks stuck with toxic assets might get some form of accounting relief.

Bernanke offered new details on how to bolster mutual funds and a program that insures bank deposits. He also stressed the need for regulators to make sure financial companies have a sufficient capital cushion against potential losses.

To guide the regulatory overhaul, Bernanke laid out key elements. One is for Congress to enact legislation so the failure of a huge financial institution can be handled in such a way to minimize fallout to the national economy. Such "too big to fail" companies must be subject to more rigorous supervision to prevent them from taking excessive risk, he said.

The Associated Press contributed to this article.

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