Stocks rebounded strongly on Tuesday, one day after falling to nearly 12-year lows, following comments from Federal Reserve (Fed) Chairman Ben Bernanke that downplayed bank nationalization fears and sparked a rally. Stocks fell Monday—as well as for the last few weeks—on concerns that not even the several government stimulus programs and aid packages will be enough to slow the recession. Further, investors have been very nervous that banks will need to be nationalized or seek bankruptcy protection, as both options would eliminate all shareholder value. Amid such fears, investors responded Tuesday to Bernanke's assertion that the banks have value that would be hurt by nationalization. Investors seemed to ignore his assertion that the economic recovery will take more than two or three years. In economic news, a U.S. home-price index plunged 18.2 percent in the fourth quarter compared to a year earlier; it was the biggest quarterly drop in the index's 21-year history. In a second report, U.S. consumer confidence tumbled to a record low since such data began being tracked in 1967. Light sweet crude oil for April delivery rose $1.52 to $39.96 a barrel on the New York Mercantile Exchange. The U.S. dollar fell versus the euro and gained versus the yen. Tuesday's stock gains covered a variety of sectors, with banks, housing, retail, technology, and energy among the big gainers. The Dow Jones industrial average rose 236.16, or 3.3 percent, to 7,350.94. Home Depot reported weaker quarterly profits that were better-than-expected, and its shares rose 10 percent. Troubled automaker General Motors (GM) gained, as well. J.P. Morgan Chase said it is reducing its dividend by 87 percent to increase savings, and its shares gained 7 percent. Bank of America and Citigroup also gained, with the latter rising on reports that is close to finalizing a deal with the Treasury to give the U.S. government a 40 percent stake in the troubled bank. The broader Standard & Poor's 500 index rose 29.81, or 4 percent, to 773.14. The technology-heavy Nasdaq composite index rose 54.11, or 3.9 percent, to 1,441.83. Several big technology shares gained, including Intel, Dell, Cisco Systems, and Advanced Micro Devices. The New York Stock Exchange composite index rose 187.95 to 4,821.73. The American Stock Exchange composite index rose 25.82 to 1,319.05. And the Russell 2000 index rose 17.90 to 412.48.
