March 24, 2008 Wall Street Rallies
on Bear Stearns Price Increase, Home Sales
New York
US stock markets surged Monday on news that home sales increased in
February and that bank JPMorgan Chase would increase its price to
buy ailing investment firm Bear Stearns.
The National Association of Realtors said the month-to-month sales
of existing homes rose 2.9 percent in February, overcoming analysts'
predictions of further decline, and bringing in the first increase
in months.
Faced with massive resistance from stockholders, JPMorgan Chase
Monday agreed to quadruple its offer for Bear Stearns to $10 a
share.
JPMorgan originally offered $2.50 a share, which represented a 90
percent write down in the value of its stock. The board accepted the
offer, but shareholders were poised to reject the fire sale price.
The new offer values the company at $1 billion, after a shortage of
cash forced it to seek short-term financing from the Federal Reserve
through JPMorgan Chase because clients had pulled $17 billion from
Bear Stearns over two days.
The collapse of two of its mortgage funds had helped spark the
turmoil in the US financial sector and the resulting economic
downturn.
"It appears that people are interested in buying stocks every time
there's just a whiff of good news," John Carey, of Pioneer
Investments in Boston told Bloomberg financial news. "We're starting
from a fairly modest level of valuations in this downturn and so
perhaps people are right in suggesting that downside is limited."
The blue chip Dow Jones Industrial Average gained 187.32 points, or
1.52 percent, to 12,548.64. The broader Standard & Poor's 500 Index
climbed 20.37 points, or 1.53 percent, to 1,349.88. The technology
heavy Nasdaq Composite Index rose 68.64 points, or 3.04 percent, to
2,326.75. Markets were closed Friday.
The US currency fell against the Euro to 64.81 Euro cents from 64.83
Euro cents Thursday, but rose against the Japanese currency to
100.73 yen from 98.91.
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