Banks stocks surge, leading markets higher

Dow rose 290, advancers ahead of decliners almost 2-1 (a little weak all considered) while NAZ was up only 14. The chart on the right shows a midday pullback when early gains were more than halved but a late day 2nd rally brought stocks near their highs for the day. This was on higher volume on NYSE than in recent rallies, 1¾B (decent for a rally day). Banks had a great day on the Fannie Mae (FNM)/Freddie Mac (FRE) bailout news (even though their stocks nosedived to under $1 each):

S&P 500 FINANCIALS INDEX

Value ...303.43

Change .. 13.47

% Change .. 4.6%

REITs, also participated in the rally with gains of 3-6%. High yield (junk bond) funds had gains of a few pennies, their version of a "big" day. Oils & other commodity stocks, among others, had limited gains while tech (as evidenced by NAZ) had a muted response to gains for other stocks.

Crude oil was down a few pennies in the106s, on nervousness but uncertainty with the hurricane entering the Gulf. The Alerian MLP index pulled back 1 to 260, probably on worries about the hurricane.

Rates on fixed mortgages dropped ¼ point resulting from today's announcement. Good & helpful news but many mortgage problems remain:

•Fixed Mortgage Rates Drop in Wake of Fannie Mae, Freddie Mac U.S. Takeover

On the inflation front, gas prices have stopped falling as shown by the 25¢ per gallon increase today in the Gulf region:

•Gasoline Wholesale Price Jumps 12%, Most in Three Years, as Ike Approaches

This news is not going to be taken well. Investors will have to start thinking about the billions this is going to cost the US gov (assuming Congress approves):

U.S. Government Takes on Big Role in Mortgage Market- AP


With all the confusion about fast changes for rules in financial markets, this is a good time to keep cool & await developments!