Home >> News >> Government >> Stocks Soar on Fed’s Move to Save Global Financial System
Print This Post Print This Post

Stocks Soar on Fed’s Move to Save Global Financial System

A bold move to shore up global financial liquidity by the ""Federal Reserve"":http://www.federalreserve.gov/ and central banks from five other countries inspired shares to soar for the nation's four biggest U.S. lenders as stocks ended the day on the highest note since early 2009.


The Dow Jones Industrial Average jumped nearly 500 points to crest at 12,045.68 by end of day, the largest single gain since March 2009, with ""Citigroup"":http://www.citigroup.com/citi/homepage/ leading the way in a 8.87-percent climb that inspired shares to hit $27.48.

""JPMorgan Chase"":https://www.chase.com/ followed close behind on a 8.44-percent path upward that saw shares for the mortgage lender hit $30.97 each.

""Wells Fargo"":https://www.wellsfargo.com/ and ""Bank of America"":https://www.bankofamerica.com/ rounded out the steep climb in shares by hitting strides of 7.39 percent and 7.30 percent, respectively, with shares rising to $25.86 and $5.44.

The rally on Wall Street follows a rescue plan for the global financial system orchestrated by the Federal Reserve, the


""European Central Bank"":http://www.ecb.int/home/html/index.en.html, and central banks from economic heavyweights Canada, England, Japan, and Switzerland.

The central banks released a joint statement in which each agreed to lower prices for U.S. dollar liquidity swaps by 50 basis points, starting Monday and ending February 2013.

Swaps describe currency exchanges between countries. Fixing dollar swaps at lower rates will make it less expensive for central banks to borrow on the dollar and ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô the hope goes ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô encourage lenders to push loans at a time when the euro zone continues to flinch from debt crises.

The European Central Bank ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô the financial institution scrambling to buttress debt-ridden euro zone countries like Italy and Spain in recent weeks ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô said in a statement that the action ""will enable the Eurosystem to provide euro to those central banks when required... and [enable] the Eurosystem to provide liquidity operations, should they be needed,"" in dollars, francs, yen, and sterling.

Market watchers remain worried that toxic assets and tight credit could result if euro zone nations default on debt obligations, further crimping lending behavior across the Atlantic and hurting the exports industry.

The Fed said in the same statement that U.S. financial institutions ""currently do not face difficulty obtaining liquidity in short-term funding markets,"" adding that it could use ""a range of tools available to provide an effective liquidity backstop for such institutions"" in the event that a liquidity crisis spreads.

Asked whether the Fed's move will bolster U.S. housing markets, Walter Molony, a spokesperson with the ""National Association of Realtors"":http://www.realtor.org/, demurs by chalking up concerns to ""jobs, consumer confidence, and issues beyond lending and appraisals.""

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

Check Also

Jump in Rates Shutting Out Refi-Seekers

Despite overall mortgage app volume on the upswing to begin 2022, the rise in rates has dropped conventional refis to their lowest levels since January 2020.

Subscribe to MDaily

MReport is here for you to stay on top of important developments in the mortgage marketplace. To begin receiving each day’s top news, market information, and breaking news updates, absolutely free of cost, simply enter your email address below.