US Stocks Soar on Fannie/Freddie Takeover

Dow up 300 early as investors bet on broader recovery

By the Associated Press

Posted Sep 8, 2008 9:40 AM CDT

(AP) – Stocks surged this morning as investors rushed to lay bets on a broad economic recovery following the weekend announcement that the US government will bail out mortgage lenders Fannie Mae and Freddie Mac. The major indices jumped, with the Dow Jones industrials gaining more than 300 points. Meanwhile, bond prices fell sharply as emboldened investors looked for riskier but higher-yielding bets.

The announcement yesterday that the Treasury Department was seizing control of the companies, which own or back about half the nation's mortgage debt, brushed aside investors' persistent worries that the companies would be felled by a spike in bad mortgage debt. "It saves Armageddon from happening," said one trader. "This helps the financials, this helps the housing market."

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The Dow Jones industrials were up more than 300 points in early trading on news the US government would take over mortgage giants Fannie Mae and Freddie Mac. (AP Photo)

A trader works on the floor of the New York Stock Exchange in this file photo. (AP Photo)

"It saves Armageddon from happening," one analyst said. "If you think about it this helps the financials, this helps the housing market. (AP Photo)

Traders gather at the post that trades Merrill Lynch on the floor of the New York Stock Exchange before the closing bell Tuesday July 29, 2008. (AP Photo/Richard Drew)

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It saves Armageddon from happening. - Dave Rovelli, managing director of US equity trading at Canaccord Adams, on the government's Fannie Mae/Freddie Mac plan

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US Stocks Soar on Fannie/Freddie Takeover