Citigroup Bailout Boosts Stocks

For the second consecutive session, stocks rallied as the federal government made steps toward stabilizing the fragile US economy. On Friday, it was the leaked announcement of Timothy Geithner to head up President-elect Obama's Treasury Department that caused a late-day rally. Monday's moves were attributed to Obama's transition team making Geithner and other appointments official, plus word that beleaguered Citigroup would receive additional financing to help weather the economic storm from bad loans and equally bad quarterly reports.

The bank has shown substantial losses in each of the last four quarters as its stock price sank below $5 per share, a point at which many institutions could not - under their charters - continue to be holders of the security. Shares of Citigroup (C) closed 57% to the good, at 5.95, still far below their value of just months ago.

Dow 8,443.39 +396.97 (4.93%); NASDAQ 1,472.02 +87.67; S&P 500 851.81 +51.78 (6.47%); NYSE Composite 5,313.76 +353.97 (7.14%)

Market internals continued their alignment to headline numbers. Advancing issues overwhelmed decliners, 5472-1213. There was also a major drawdown in the number of new lows, which had reached historic proportions last week. While there were just 5 recorded new highs, the number of new lows shank considerably from Thursday and Friday's figures, down to 418, as compared to the more than 2000 new lows on Friday. Volume was on the high side, another positive development.

NYSE Volume 2,034,090,000
NASDAQ Volume 2,590,952,000

Commodities staged a rally all their own. Crude oil jumped $4.14 to $54.07. Gold added $29.00, to $821.40, marking the first time gold has been over $800 in a number of weeks. Silver gained by more than 10%, up $1.00, to finish at $10.51 per ounce.

While these numbers in commodities and the general stock market all look good today and are signs of confidence in the new administration, there are still rough patches through which the US economy must travel. Though the days of bank bailouts may be behind us for now, there still are underlying issues in mainstream companies, notably, lower earnings and coming layoffs. These are bound to follow on shortly and carry through into the first quarter of 2009.