Bailout Rally Tails Off Late

Persistent worries about the non-financial economy temper gains
By Nick McMaster,  Newser Staff
Posted Sep 8, 2008 3:38 PM CDT
Traders gather around the post where their firm trades Fannie Mae prior to the opening bell at the New York Stock Exchange today.   (AP Photo)
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(Newser) – US stocks rallied as traders bet the bailout of Fannie Mae and Freddie Mac would help the economy recover, but lost some of those gains—with the Nasdaq even flirting with losses—as the day wore on, MarketWatch reports. Nonetheless, the Dow gained 289.78, closing at 11,510.74. The Nasdaq closed up 13.88, at 2,269.76, while the S&P 500 rose 25.48 to finish at 1,267.79.

The use of Henry Paulson’s self-described “bazooka” dominated trading today: Bank stocks generally rose on hopes of eventually renewed financial health, with Bank of America seeing 7.7% gains. Likewise, Home Depot rose 5.5% on bets of increased housing-sector activity. Fannie and Freddie themselves saw huge losses—89.6% and 82.7%, respectively—with the bailout expected to wipe out shareholders.