Stocks Surge On Financial Fix-Up, Short Selling Ban
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Stocks are in rocket mode this morning after a plan by the U.S. government to aggressively target the credit crisis and ban short-selling of financial stocks. Shortly after 10AM ET, the Dow was up 350 points, the Nasdaq was up 55 points and the S&P 500 was up 38 points.
Treasury Secretary Henry Paulson is working with Congress to pass legislation to remove troubled assets from the financial system. In addition, the GSEs Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities (MBS). Also, Treasury will expand the MBS purchase program announced earlier this month.
The U.S. Treasury Department also announced the establishment of a temporary guaranty program for the U.S. money market mutual fund industry. For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund – both retail and institutional – that pays a fee to participate in the program.
Following yesterday's move in the UK to ban short-selling in financial stocks, the U.S. SEC announced a similar move, banning shorting of 799 financial companies until October 2nd.
A number of financial stocks are higher this morning on the news. The key financial ETF, Financial Select Sector SPDR (AMEX: XLF), is up 9%. Investment banks Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS), which have seen their stocks pummeled recently, are up 24% and 16%, respectively, this morning.
Treasury Secretary Henry Paulson is working with Congress to pass legislation to remove troubled assets from the financial system. In addition, the GSEs Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities (MBS). Also, Treasury will expand the MBS purchase program announced earlier this month.
The U.S. Treasury Department also announced the establishment of a temporary guaranty program for the U.S. money market mutual fund industry. For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund – both retail and institutional – that pays a fee to participate in the program.
Following yesterday's move in the UK to ban short-selling in financial stocks, the U.S. SEC announced a similar move, banning shorting of 799 financial companies until October 2nd.
A number of financial stocks are higher this morning on the news. The key financial ETF, Financial Select Sector SPDR (AMEX: XLF), is up 9%. Investment banks Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS), which have seen their stocks pummeled recently, are up 24% and 16%, respectively, this morning.
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