Stocks soar on $200M Fed infusion

Mar 11, 2008 @ 1:23 pm

By Aaron Siegel

In an effort to provide liquidity to cash-strapped financial institutions, the Federal Reserve will lend up to $200 billion of treasury securities to bond dealers in exchange for collateral such as mortgage-backed securities.

The securities will be made available through an auction process.

Auctions will be held on a weekly basis, beginning on March 27.

Additionally, the Federal Open Market Committee has authorized increases in its existing temporary reciprocal currency arrangements the European Central Bank, the Bank of England and the Swiss National Bank and the Bank of Canada.

Under the arrangements, The European Central Bank said it would offer $30 billion in loans, while the Swiss National Bank will offer $6 billion in loans.

The Bank of England said it would extend its ten billion pound lending program.

The Bank of Canada will auction $4 billion in 28-day repurchase agreements over the next month.

The actions, which were announced today, supplement the measures announced by the Federal Reserve on Friday to boost the size of the Term Auction Facility to $100 billion and to undertake a series of term repurchase transactions that will equal $100 billion (InvestmentNews, March 8) .

The announcement pushed markets to their biggest one-day percentage gain since 2003.

In late-afternoon trading, the Dow Jones Industrial Average rose 357.96 points to 12098.11, the Nasdaq jumped 72.15 to 2241.49 and Standard & Poor's 500 increased 39.18 to 1312.55.

0
Comments

What do you think?

View comments

Recommended for you

Latest news & opinion

Wells Fargo will ramp up spending to lure brokers

Wirehouse, after losing 400 brokers in first quarter, is bucking trend among rivals who have said they are going to cut back on spending big bucks recruiting veteran advisers

DOL fiduciary rule pushes indexed annuity carriers to develop new products

Insurers are introducing fixed-rate deferred annuities with income guarantees to circumvent BICE.

Trump is gutting rules that Corporate America hates

With executive orders, bureaucratic actions and unprecedented use of an obscure statute, the administration has killed or postponed dozens of regulations.

Wells Fargo Advisors restricting investments for retirement accounts

Mutual fund sales will be limited to T shares, while municipal bonds, preferred stock and international debt will be prohibited.

Morgan Stanley joins competitors in cutting back on recruiting

Wirehouse said it intends to increase its investment in existing talent.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print