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New York - Unfazed by GM's Bankruptcy, The Dow Rallies

Published on: June 1, 2009 04:06 PM
By:  CNN Money
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New York - Stocks rallied Monday, sending the Dow near the break even point for the year, as better-than-expected readings on manufacturing activity raised hopes that a global economic recovery is brewing.

The Dow Jones industrial average surged 221 points, or 2.6%, to close At 8,721, the bluechip average is within 40 points of breaking even for the year.

nvestors largely looked past the bankruptcy of General Motors, which comes after a months-long restructuring effort fell short.

“Today’s data were better than expected, both here and abroad,” said Phil Orlando, chief equity market strategist at Federated Investors. The recession has “reached its nadir” and the improved economic outlook has helped “draw some cash off the sidelines,” he said.

Meanwhile, two Dow components, General Motors and Citigroup, will be officially removed from the average on June 8, Dow Jones announced Monday. Travelers Companies will take the place of Citi; Cisco Systems will fill GM’s slot.

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“I think getting some of the dogs out of the Dow is helping [to] feed the psychology,” said Nick Kalivas, vice president of financial research at MF Global. But Monday’s manufacturing reports were the main driver of the rally, he added.


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Read Comments (7)  —  Post Yours »

1

 Jun 01, 2009 at 03:38 PM Anonymous Says:

Yes. The dow is up almost 3000 point from its low of 6000. Of course there is absolutely no reason for it. The nation is drunk on Obama mania. When the dust clears we are all going to be shocked.

2

 Jun 01, 2009 at 03:55 PM Time to short Says:

#1 if that is what you think then you should short the market, I tend to agree with
your opinion, but I learned not to fight the tape, good luck

3

 Jun 01, 2009 at 05:01 PM Anonymous Says:

To all you Obama haters, it's time to apologize. He has succeeded in bringing us out of the George Bush recession.

4

 Jun 01, 2009 at 05:52 PM Anonymous Says:

Reply to #3  
Anonymous Says:

To all you Obama haters, it's time to apologize. He has succeeded in bringing us out of the George Bush recession.

I love you people who know nothing about finance or economics making this into a political debate. For starters fo you know what the efficient market theory is? Do you even know the difference between value investing and growth investing? Do you know the difference between index funds and actively managed funds? Do you know the difference betweens puts and calls? When you know some basics about investing you can come back and discuss why you think this market rally has anything to do with Obama's economic policies, until then go back to watching your Farenheit 9/11 DVD and dont post here.
Maybe you should be the one apologizing for Obama's projections for adding ten trillion dollars onto the national deficit, which will bankrupt this country.

5

 Jun 01, 2009 at 06:27 PM Elections Have Consequences Says:

Reply to #3  
Anonymous Says:

To all you Obama haters, it's time to apologize. He has succeeded in bringing us out of the George Bush recession.

Allow me to quote from Dow Jones' press release today in removing CitiBank from the list:

"We were reluctant to remove Citigroup at the height of the financial frenzy, but it is clear that the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake. "

Let's focus on the words, "the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake" and think about what that means to this country where the govt isnt supposed to own businesses.

I am waiting for someone to SUE the govt for taking ownership in private industry. How are legit companies like Ford, Honda, Toyota, etc., going to have FAIR competition with the Government Motors Corp?? The answer is that they wont.

6

 Jun 02, 2009 at 01:18 AM Milhouse Says:

Reply to #5  
Elections Have Consequences Says:

Allow me to quote from Dow Jones' press release today in removing CitiBank from the list:

"We were reluctant to remove Citigroup at the height of the financial frenzy, but it is clear that the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake. "

Let's focus on the words, "the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake" and think about what that means to this country where the govt isnt supposed to own businesses.

I am waiting for someone to SUE the govt for taking ownership in private industry. How are legit companies like Ford, Honda, Toyota, etc., going to have FAIR competition with the Government Motors Corp?? The answer is that they wont.

"I am waiting for someone to SUE the govt for taking ownership in private industry."

On what grounds? What law or constitutional provision prohibits this?

7

 Jun 02, 2009 at 12:20 PM CR Says:

Reply to #5  
Elections Have Consequences Says:

Allow me to quote from Dow Jones' press release today in removing CitiBank from the list:

"We were reluctant to remove Citigroup at the height of the financial frenzy, but it is clear that the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake. "

Let's focus on the words, "the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake" and think about what that means to this country where the govt isnt supposed to own businesses.

I am waiting for someone to SUE the govt for taking ownership in private industry. How are legit companies like Ford, Honda, Toyota, etc., going to have FAIR competition with the Government Motors Corp?? The answer is that they wont.

Given the government's track record in running companies (Amtrak, FNMA, FHMC, etc.) the CEO of Ford should be sleeping quite soundly. He still heads a dynamic, independent company that has the freedom to adjust. Meanwhile, expect C (both Chrysler AND Citi have used that ticker symbol) and GM to soldier on feebly as bureaucracy-dominated zombie companies. All will be unable to execute sound business plans due to political meddling by their new paymasters.

8

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