Wall Street rose sharply Thursday, as expectations that U.S. Congress will approve the 700 billion U.S. dollars bailout plan overshadowed dim outlook from General Electric Co. and downbeat economic data.
Investors grew cautiously optimistic that the U.S. government and lawmakers would reach an agreement to save the ailing financial system, after Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke urged Congress on Tuesday and Wednesday to quickly passed the plan.
Details of the plan are still being worked out. Governmental officials and lawmakers have agreed on limits on pay packages for executives whose companies will benefit from the bailout and the plan is reportedly almost a done deal.
Expectations that policy makers will approve the plan boosted market sentiment. Dow Jones, led by banks, climbed over 200 points and remained higher even amid disappointing corporate and economic news.
General Electric (GE) announced that it was lowering its outlook for third-quarter and full-year earnings. The company also suspended its stock buyback because of "unprecedented weakness and volatility" in financial markets. GE retreated in early trading.
In addition, the U.S. Labor Department says the number of jobless claims rose by 32,000 to 493,000 last week, the highest level in seven years and much greater than analysts' expectations of 445,000.
Meanwhile, the U.S. Commerce Department says orders for durable goods fell by 4.5 percent last month, far worse than the 1.6 percent decline that economists expected. another report from the Commerce Department showed that new homes sales fell by 11.5 percent in August to a seasonally adjusted annual sales rate of 460,000 units, the slowest sales pace since January 1991.
The Dow Jones rose 245.00 to 11,070.49. Broader indexes also moved higher. The Standard & Poor's 500 index rose 26.89 to 1,212.76 and the Nasdaq climbed 38.51 to 2,194.19.