US STOCKS-Wall St extends rebound on bank accounting talk
Thu Feb 5, 2009 11:25am EST
NEW YORK, Feb 5 (Reuters) - U.S. stocks extended gains on Thursday as shares of financial services companies sharply cut losses on talk that Washington's rescue plan for banks may include suspension of a key accounting rule, traders said.
"The market suspects there maybe a suspension of mark-to-market accounting as part of the plan coming out of Washington to shore up the financial system," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. "It would be very impactful."
Among bank stocks, shares of Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz) cut more than half of their losses following the accounting talk. Earlier the stock had hit its lowest since 1984.
The Dow Jones industrial average .DJI rose 10.11 points, or 0.13 percent, to 7,966.77. The Standard & Poor's 500 Index .SPX added 3.88 points, or 0.47 percent, to 836.11. The Nasdaq Composite Index .IXIC climbed 13.15 points, or 0.87 percent, to 1,528.20.
The KBW bank index .BKX sharply pared losses and was down 1.4 percent. Earlier in the session it was trading as much as 6.8 percent lower.
Mark-to-market accounting values assets at their current market value and has forced banks and other financial institutions to write down billions of dollars' worth of securities on their books. (Reporting by Ellis Mnyandu; Editing by James Dalgleish)
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