Markets soar on Citigroup bailout

Stocks rallied strongly, Dow shot up 324 & other indices tagged along. Advancers were over decliners 6-1 while NAZ shot up 51. Dow is now up almost 1K during the last hour of trading on Fri & the first couple of hours on Mon. On the Citigroup (C) news, the S&P 500 FINANCIALS INDEX was up 16 but still remains at a very depressed 146.

Citigroup, still a Dow stock, soared to $6 after the gov agreed to invest billions in them, averting a global financial disaster. All banks found buyers today along with about everybody else including MLPs, REITs & even junk bond funds. The $25B invested today follows $20B last month, all aimed at avoiding a run on the bank. Their key problem is their $306B of troubled loans, they need protection.

•Citigroup Gets $306 Billion U.S. Rescue From Toxic Assets, Cash Infusion


Meanwhile economic news keeps coming. Home sales tumbled badly last month. Sales plunged 3.1% while the average price per sale dropped 11.8%, the largest decline since record keeping began 40 years ago. Increased foreclosures are driving the sharp decline, the current inventory of homes is estimated to last 10.2 months.

•U.S. Home Resales Tumble as Foreclosures Push Prices Down Most on Record


Economic misery is not confined to the US. The UK is estimated to shrink by 1.25%, the worst performance since 1991.

•U.K. Economy May Shrink by the Most Since '91, Darling Says in Budget Plan


Oil rsponded well to the Citigroup news, bringing back its buyers:

CLF09.NYM

Crude Oil Jan 09

....53.03

.. 3.10 .......(6.21%)

This will be a holiday shortened week of trading, adding a little extra to volatility which is already at astronomical levels (the VIX plummeted 9 to 64). Black Friday retail sales will give an early signal of how the important holiday selling season is starting out.