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A bullish start for Wall Street.

Markets open 2009 in positive mood on hopes Obama will boost economy and that last year's fiasco cannot be repeated US stocks staged a powerful rally in the first session of the year as investors bet on president-elect Barack Obama's massive plans to revive the recession-mired economy. Building on modest opening gains in thin trade, the Dow Jones Industrial Average surged 258.30 points, or 2.94 per cent, to finish at 9,034.69. The tech-studded Nasdaq leapt 55.18 points (3.5 per cent) to 1,632.21 and the broad-market Standard & Poor's 500 index advanced 28.55 points (3.16 per cent) to close on 931.80. "The market awaits details of a fiscal stimulus plan to be offered by the Obama administration," said Al Goldman, analyst at Wachovia Securities. Obama, who takes office on January 20, has already pledged stepped-up efforts to revive the world's largest economy in the face of the worst global financial crisis since the Great Depression. Before the New Year holiday on Thursday, Wall Street closed 2008 with a two-day rally that failed to ease the blow of the rather horrific full-year losses. The blue-chip Dow gained 1.25 per cent on Wednesday but ended the year with a loss of 33.84 per cent, the worst since 1931. The S&P 500 also had its most dismal annual performance in 77 years and the Nasdaq posted a record loss. "Hope for much better returns in 2009 has permeated the marketplace," said Patrick O'Hare, an analyst at Briefing.com. "Unless there is a sea-change in sentiment over the course of the next two trading sessions, it looks as if we'll be able to say there was indeed a Santa Claus rally." Market activity was slack on Friday as traders cobbled together a four-day weekend ahead of what many expect will be an even worse year than last year. "As we enter 2009, the US and global economies are in steep decline, in what is the most severe synchronised global downturn of recent times," said Nigel Gault, chief US economist at IHS Global Insight. "We are not looking for signs of recovery yet, merely for signs that the rate of decline is becoming less severe - but cannot find them." Gault cautioned that any stimulus plan based on spending to boost infrastructure would take time to revitalise the economy. "But how quickly can the funds actually be spent?" he asked. "Infrastructure spending is a key part of the package, and it cannot be turned on and off like a faucet. "We assume that the funds will take much longer than two years to spend out." Others were decidedly more upbeat. David Kotok of Cumberland Advisors said the outlook is positive. "We expect the central banks and governments of the world to continue aggressive monetary and fiscal stimulus. We anticipate credit markets will improve in 2009," he said. US markets shrugged off a dire report on the rapidly slumping manufacturing sector. The Institute for Supply Management said its monthly PMI index in December fell for the fifth straight month to its lowest contraction reading since June 1980. Among stocks in focus were those of banks that announced the completion of their acquisition of struggling rivals, marking one of the most dramatic reshapings of the banking landscape in US history. Bank of America jumped 1.78 per cent to $14.33 after swallowing up Wall Street investment bank Merrill Lynch to become the world's biggest bank and financial firm by assets. Meanwhile, ailing US auto giant General Motors surged 14.06 per cent to $3.65. The US Treasury on Wednesday gave GM an emergency loan of $4 billion to stave off bankruptcy. In Asia, Hong Kong had earlier soared 4.6 per cent and Seoul added 2.93 per cent. The Tokyo market remains closed until tomorrow for extended new year holidays. Last Monday, the bourse ended the year down 42.12 per cent from 2007, its worst-ever annual percentage fall. In Europe, the Paris CAC 40 index shot up 4.09 per cent, the Frankfurt Dax soared 3.39 per cent and the FTSE 100 in London rose 2.88 per cent. The three key markets had shed between 31 per cent and 43 per cent last year. "The mindset may be that the turmoil of 2008 is now behind us and that 2009, although not set to be great, needs to start with a bang," said CMC Markets trader Jimmy Yates.

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Publication:7 Days (Dubai, United Arab Emirates)
Date:Jan 4, 2009
Words:761
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