U.S. stock prices rallied Wednesday, as optimism soared about a government stimulus package for the flagging U.S. economy. The major stock averages have substantially cut their losses in the wake of last month's deadly terrorist attacks.
The Dow Jones Industrial Average rose 173 points, almost two percent, to 9,124. The broader Standard and Poor's 500 index gained 20 points, two percent. The tech-weighted Nasdaq composite soared almost six percent higher.
Analysts say the promise of a multi-billion dollar economic stimulus package from Washington revived sagging morale on Wall Street.
The latest news on the U.S. economy also was positive. Data show non-manufacturing activity climbed in September after hitting a four-year low in August. Experts were expecting a further decline in the services sector.
The U.S. stock markets plunged more than 16 percent in the week following the terrorist attacks. The Dow Industrials now are just five percent lower. The Nasdaq is down about 6.75 percent.
The rally added to Tuesday's gains after the U.S. central bank lowered interest rates for the ninth time this year.
Jeremy Siegel, a professor at the Wharton Business School in Pennsylvania, applauds the fiscal stimulus package being worked on in Washington. But Professor Siegel believes the Federal Reserve, the central bank, has a critical role as the United States copes with the likelihood of recession, and the U.S. government should encourage more rate reductions.
"I don't believe the "Fed" [Federal Reserve Bank] can prevent a recession if it's going to happen. I think the "Fed" can make us feel a lot better going into one, in other words, take off the edge, take off the real hard drop in economic activity," Professor Siegel said.
Germany's largest bank, Deutsche Bank, one of the leading international financial services providers, has given a vote of confidence to the U.S. financial world. Its shares started trading on the New York Stock Exchange Wednesday. Deutsche Bank chairman Rolf Breuer says he decided to go ahead with his debut in the U.S. captial markets, despite the events of September 11.
"I am convinced these dramatic events, these disasters on September 11, have been very bad indeed," he said. "But they have not hit the industry, the markets, the economy to an extent which will be of a continuous importance."
Trading on the New York Stock Exchange gives Deutsche Bank access to the largest capital market in the world. This puts it in position for future acquisitions. The German bank says it plans to expand primarily in Europe.