Wall Street rebounded Tuesday after its biggest one-day sell-off in years amid growing expectations that U.S. lawmakers will salvage a $700 billion rescue plan for the financial sector. However, paralyzed credit markets where businesses turn to raise money showed no sign of relief. The stock recovery was not unexpected, as plunges on Wall Street often attract bargain hunters. In Tuesday's session, however, the major stock indexes were not the focus as investors closely watched the credit markets. A key interest rate that banks charge to lend to each other jumped higher, reflecting a tightening of the availability of credit that could have effects through the broader economy. Critics of the government rescue plan believe that it was too expensive and would not have done enough to facilitate lending. To maintain pressure ahead of Thursday's likely vote on the measure, President George W. Bush said that the damage to the economy will be “painful and lasting” unless Congress passes the rescue legislation. In economic news, the Conference Board said its index of U.S. consumer confidence rose unexpectedly in September to 59.8 from 58.5 the previous month. Despite the gain, the reading is near a 16-year low. Light sweet crude oil for November delivery rose $4.27 to $100.64 on the New York Mercantile Exchange. Oil fell more than $10 a barrel Monday as investors worried that a weaker U.S. economy would lower demand. The U.S. dollar gained versus the euro and the yen. Many of the financial-services stocks that plummeted Monday rebounded on Tuesday. Morgan Stanley rose 15 percent, Merrill Lynch gained 10 percent, and Wachovia—which plunged over 80 percent Monday on news that Citigroup is buying the company's bank assets for $2.2 billion—gained 94 percent. The Dow Jones industrial average rose 485.21, or 4.7 percent, to 10,850.66. It was the index's third-biggest one-day point gain. Citigroup rose 18 percent, J.P. Morgan Chase added 13 percent, and Bank of America gained 11 percent. The broader Standard & Poor's 500 index rose 58.32, or 5.3 percent, to 1,164.74. The technology-heavy Nasdaq composite index rose 98.60, or 5 percent, to 2,082.33. The New York Stock Exchange composite index rose 328.91 to 7,532.92. The American Stock Exchange composite index rose 27.97 to 1,786.89. And the Russell 2000 index rose 21.86 to 679.58.
