The Dow had a big day on Tuesday, leaping 379 points after Citibank reported two months of profits and Fed chief Ben Bernanke indicated the banks could have some wiggle room in the accounting of their junk assets. The day may have ended with high-fives on Wall Street, but there’s good reason to stay gloomy.
Wall Street Journal:
More than nine in every ten stocks on the New York Stock Exchange climbed. All 30 Dow components rose. General Electric climbed 20%, undoing some of the damage from a rout that has pushed its shares down by more than 45% this year. Alcoa and General Motors rose 13% each. Both have declined more than 40% so far in 2009 even after Tuesday’s surge.
“This kind of broad-based move is encouraging, but the question becomes will it be sustained? At this point, it certainly feels that way,” said Gordon Charlop, managing director at Rosenblatt Securities. Similar sharp stock-market rallies in September, October and November turned out to be fleeting. The market has still not had two consecutive sessions of gains since Feb. 5 and Feb. 6. And all three major indexes are still more than 50% below their October 2007 peaks.