March 10, 2009: Powerful Rally Shakes Stocks Out of Slump Nasdaq Leaps 7.1%

Day After The Stock Market Bottom from the 2009 Low

By Kejal Vyas and Rob Curran
March 10, 2009 7:25 pm ET

Hope that fortunes may be turning for troubled banks and that regulators are moving aggressively to address disruptions in the markets that helped drive a broad stock rally on Tuesday.

The Dow Jones Industrial Average rose 379.44 points, or 5.8%, to 6926.49, closing at its high for the day and recording its biggest point and percentage gains since late November.

The S&P 500-stock index surged 43.07 points, or 6.4%, to end at 719.60 as its financial sector gained 15%. The Nasdaq Composite Index gained 89.64 points, or 7.1%, to 1358.28. Tech stocks snapped back from a sharp selloff on Monday that pushed stock indexes to fresh bear-market lows.

More than nine in every ten stocks on the New York Stock Exchange climbed. All 30 Dow components rose. General Electric GE 2.68%increase; green up pointing triangle climbed 20%, undoing some of the damage from a rout that has pushed its shares down by more than 45% this year. Alcoa AA 7.74%increase; green up pointing triangle and General Motors GM 4.41%increase; green up pointing triangle rose 13% each. Both have declined more than 40% so far in 2009 even after Tuesday's surge.

Short sellers may have rushed into the market to cover bets on Tuesday as the rally gathered steam. “On a day like today, when this thing gets some legs, the sellers decide to back off and the shorts start to get nervous, and you find yourself with a big fat move,” Mr. Charlop said.

Stocks rose sharply at the open and never wavered. The rally flushed investors out of safe-haven bets on Treasurys, gold and the dollar. The yield on the 10-year note briefly pushed above 3% while the two-year note's yield topped 1%. Gold futures slid under $900 an ounce.

This kind of broad-based move is encouraging, but the question becomes will it be sustained? At this point, it certainly feels that way,” said Gordon Charlop, managing director at Rosenblatt Securities. Similar sharp stock-market rallies in September, October and November turned out to be fleeting. The market has still not had two consecutive sessions of gains since Feb. 5 and Feb. 6. And all three major indexes are still more than 50% below their October 2007 peaks.