Stock prices rose on many of the world's markets Tuesday after a report that troubled Citigroup posted its best financial performance in more than a year in the first two months of 2009.
An internal memo from Citigroup chief Vikram Pandit said the firm had an operating profit of more than $8 billion so far this year.Global financial markets took a break from persistent gloom-and-doom pessimism to rally sharply Tuesday.
After months of relentlessly selling shares, investors returned to a buying mood, sending markets soaring from Asia to Europe to the Americas.
"It is nice to know that the market does not only go in one direction when that one direction seems to be down," said Michael Farr,Washington-based market analyst.
With governments and central banks around the world struggling to contain and reverse a financial crisis and global credit squeeze, investors responded enthusiastically to positive news from Citigroup, one of America's largest banks and financial services providers. Citigroup's top executive, CEO Vikram Pandit, reported the company has operated at a profit for the first two months of the year, after suffering five consecutive quarterly losses.
For weeks, U.S. legislators have been debating the merits of further government intervention to prop up major financial corporations like Citigroup, as opposed to nationalizing them or allowing them to go bankrupt.
Once started, the market rally was not derailed by other, less upbeat news. The Commerce Department reported U.S. businesses cut inventories at the wholesale level for a fifth consecutive month in February, and Delta Airlines announced plans to further slash international routes. Brazil revealed its economy contracted at a 3.6 percent rate in the final quarter of last year, while the head of the International Monetary Fund, Dominique Strauss-Kahn, proclaimed that the world has entered what he termed a "Great Recession" that could last a long time.
Many analysts have been left asking if Tuesday's rally was a sign of better days to come, or a momentary interruption of a continuing trend downward. UBS wealth management researcher Michael Ryan says, at long last, markets may have reached a bottom.
"The bounce we are getting today comes off of a period where equity markets have been under severe pressure and we have seen significant losses," said Ryan. "I think the fact that we have seen markets start to rebound suggests that we have reached really technically-oversold levels."
Market analyst Michael Farr says no one should interpret a one-day rally as a sign of a market turnaround, noting that economic conditions remain grim in the United States and elsewhere. Just the same, he says, in today's climate, market upticks should be savored.
"Carpe diem, live for the day! Enjoy this moment - we have not had enough of them," he said.
Even with the day's rally, Wall Street's Dow Jones Industrial Average has lost roughly half its value since late 2007. Global financial losses of wealth have been estimated as high as $50 trillion.