Wall Street rose sharply Friday as a strong outlook from IBM encouraged investors to buy back into stocks after their huge drop this week.
The market remains extremely skittish, however. The Dow, having suffered its worst three-day plunge in over five years, has fallen to levels not seen since last March.
Some companies are weathering the economic slowdown well — like International Business Machines Corp., which told Wall Street late Thursday to raise its 2008 profit estimates for the tech company, and General Electric Co., which posted a fourth-quarter profit rise Friday.
But others are struggling. Washington Mutual Inc. reported a steep loss late Thursday for the fourth quarter, just as Citigroup Inc. and Merrill Lynch did earlier in the week. With the banking industry trying to fix its shrinking portfolios and preparing for more distress in consumer debt, the economy may only have the government to fall back on.
Federal Reserve monetary policymakers meet Jan. 29-30, and the market widely expects them to lower the key interest rate, perhaps by a half-point. Federal Reserve Bank of Richmond President Jeffrey Lacker said Friday that more rate cuts are “quite possible.”
And at 11:50 a.m. EST (1650 GMT), President George W. Bush is expected to speak on the U.S. economy and discuss a plan to stimulate the economy through tax rebates and other strategies. Treasury Secretary Henry Paulson said Friday on NBC’s “Today” show he was confident a temporary stimulus package can be agreed upon quickly.
In the first hour of trading, the Dow shot up 122.34, or 1.01 percent, to 12,281.55.
Broader stock indicators also rose. The Standard & Poor’s 500 index gained 10.44, or 0.78 percent, to 1,343.69, and the Nasdaq composite index advanced 19.65, or 0.84 percent, to 2,366.55.
Government bonds fell as stocks rallied. The yield on the benchmark 10-year Treasury note, which moves opposite…