(AP) Wall Street looked to extend its gains Wednesday as investors overseas applauded the move by the Federal Reserve and other central banks to pump more liquidity into distressed financial markets.
The tone in markets around the world was clearly improved after investors sent stocks sharply higher on Tuesday, including a 416-point surge in the Dow Jones industrials, their biggest one-day point gain since 2002. Most Asian and European markets rose more than 1.5 percent on Wednesday.
The Fed said it plans to lend Treasurys in exchange for mortgage-backed securities and other battered debt that all but collapsed in the subprime mortgage crisis. Global financial institutions have written down almost $200 billion due to the credit crisis, and big U.S. investment banks next week are expected to report more losses when they issue first-quarter results.
But, Wall Street's big gains might be short lived given the market's volatility in the past few weeks. And rattled investors might use recent gains to sell and take profits.
We could use a little good economic news. But I suspect this surge has more to do with the fact that Elliot Spitzer isn't going to be around much longer, and Wall Street is celebrating his demise. Getting rid of Spitzer means less intrusion into the inner dealings of the big firms that have been taking a beating lately and less scrutiny from Albany. More than that, it's symbolic to have the guy who went after Dick Grasso go down in flames.
It's pretty clear from what I've seen that Spitzer did this to himself, crazy theories and conspiracy models notwithstanding. The culprit appears to be a single wire transfer of money that he tried to break up into smaller pieces, and the bank contacted the Feds, as required by law.