Shares rose on Monday after investors bet on an economic recovery in the financial and housing after the announcement that the government will rescue the mortgage giants Fannie Mae and Freddie Mac.
The Treasury Department announced on Sunday that took control of both companies, which have about half of the U.S. mortgage debts.
Investors were hoping that the plan to inject up to 100,000 million dollars to each of the financial mortgage subsidized by the government could not only help lower mortgage rates, but perhaps to boost the economy in general. The measure could help banks to be more open to sign new mortgages and refinance existing ones at lower rates, offering a possible lifeline to consumers who are struggling with payments are increased.
But government support two institutions that many Wall Street observers have said they are simply too big to drop probably not alleviate the problems of homeowners behind in paying their mortgages.
Dave Rovelli, managing director of trading securities of Canaccord Adams in New York, said that while the plan boosts confidence in sectors such as financial and housing construction, not immediately relieve the concerns in other areas of the economy. Still, he noted, the measure was much better received than a collapse of Fannie Mae or Freddie Mac.
"Evita occurs battle of the end of the world," he said. "If one thinks about it, it helps finance, helps the housing market. The technology sector received a blow last week. Does this really the technology sector? Do not think so", he said.
At the close, the Dow Jones industrial average gained 289.53 points (2.58%) to 11.510,49, after he arrived in the morning to rise almost 350.
The broader market indicators also rebounded. The Standard & Poor's index gained 25.49 points (2.05%) at 1.267,80 units, while the Nasdaq composite index rose 13.88 units (0.62%) to 2.269.76.
The papers in a hike exceeded the shares in low ratio of 2 to 1 on the Stock Exchange in New York, where the volume of transactions was 1,500 million shares.
The Russell 2000 index, the barometer of smaller companies listed, rose 14.01 points (1.95%) to 732.86.
The Treasury bond yields to 10 years, which moves opposite to price, rose to 3.71% from 3.69% on Friday. The dollar contributions to rise against other hard currencies, while gold prices also rebounded.
In Europe, the British FTSE 100 index closed with a rise of 3.81%, the German DAX index gained 3.06% and the French CAC-40 index rose 3.42%. In Asia, the Nikkei index of the Tokyo Stock Exchange closed with a rise of 3.4% and Hang Seng Hong Kong gained 4.3%.
