US STOCKS-Wall St rallies on G20, accounting-rule changes

Thu Apr 2, 2009 6:10pm BST

Quotes

   

* G20 to pump $1 trillion into the economy

* Regulator relaxes accounting rules for banks

* Factory orders rise in February

* Dow and S&P each up 3.5 pct, Nasdaq gains 3.9 pct

* For up-to-the-minute market news click [STXNEWS/US] (Updates to midday, changes byline)

By Rodrigo Campos

NEW YORK, April 2 (Reuters) - U.S. stocks jumped 4 percent on Thursday after world leaders agreed to pump an additional trillion dollars into the economy to fight the financial crisis and on rule changes aimed at giving banks flexibility when dealing with toxic assets.

Leaders of the G20 announced an additional $500 billion for the International Monetary Fund, plus $250 billion in IMF Special Drawing Rights and $250 billion to boost trade, to fight the worst economic crisis since the 1930s. For details see [ID:nL1230573]

Adding to the positive tone, shares of large manufacturers such as Caterpillar Inc (CAT.N) rose on hopes the economy may be stabilizing. Government data showed U.S. factory orders rose in February for the first time in seven months.

Financial shares, a key driver of the recent rally, surged on bets for an improving global economy and relaxation of accounting rules that have resulted in sharp hits to their balance sheets. [ID:nN02355900]

Shares of Bank of America (BAC.N) climbed 4.3 percent to $7.35 while Citigroup (C.N) rose 1.9 percent to $2.73. The KBW Bank index .BKX advanced 2.5 percent.

"Simply put," the accounting rule change "has the potential to take some of the volatility out of the financial services' income statements," said Craig Peckham, equity trading strategist at Jefferies & Company in New York.

"That has been one of the elements that's made it hard to own financials over the last year."

The Dow Jones industrial average .DJI gained 271.04 points, or 3.49 percent, to 8,032.64, after earlier climbing to a session high of 8,075.73. The Standard & Poor's 500 Index .SPX jumped 28.52 points, or 3.52 percent, to 839.60, near a session high of 845.61. The Nasdaq Composite Index .IXIC rallied 60.02 points, or 3.87 percent, to 1,611.62, after earlier rising as high as 1623.34.

Thursday's rally helped the S&P 500 rise nearly 25 percent from 12-year lows reached early last month and cut its year-to-date losses to around 7 percent.

The Nasdaq is now up more than 2 percent for the year.

The industrial sector was among the top gainers in a broad-based rally, as U.S. data showed new orders received by factories rose 1.8 percent in February after a 3.5 percent drop in January, breaking a six-month streak of declines and boosting hopes the economy may be starting to climb out of recession. [ID:nN0283980].

Shares of construction, mining and forestry machinery manufacturer Caterpillar jumped 9 percent to $31.61 while aerospace technology provider United Technologies Corp (UTX.N) climbed 5.6 percent to $46.33.

"People woke up and looked at the body of economic data that's come out over the last 24 hours, and people are starting to feel like we may be seeing the early stages of the turn," Peckham added.

Shares of IBM (IBM.N) traded above $100 for the first time since early October and were the top boost to the Dow industrials.

Chevron (CVX.N) gave another boost to the blue-chip Dow industrials, up 3.7 percent at $70.85 as crude oil futures CLc1 shot up 8 percent, or $3.87, to $52.26 a barrel on optimism for an economic recovery.

Shares of General Motors (GM.N) surged nearly 10 percent to $2.12 a day after executives said March auto sales pointed to the "first signs of brightening" in the auto industry. [ID:nN01353569] (Additional reporting by Leah Schnurr; Editing by Jan Paschal)

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