Bulls stampeded through stock markets around the world Friday after Washington announced an historic bailout plan to acquire the toxic mortgage-backed securities that have frozen markets around the world.
President Bush acknowledged that substantial taxpayer money will be put at risk in the program to rescue the reeling financial system, but called for bipartisan support.
"Americans' personal savings are threatened," Treasury Secretary Henry Paulson said in a news conference where he outlined steps to shore up the financial system.
"These illiquid assets are choking off the flow of credit that is so vitally important to our economy," he said, referring to mortgage-backed securities that the government plans to acquire. In response to a question, Mr. Paulson said the cost of the program would be "hundreds of millions of dollars."
Near mid-day, the Dow Jones Industrial Average surged 385 points, or 3.5 percent, to 11,404. The Nasdaq jumped 47 points, or 3.9 percent to 1,254.
The Morgan Stanley High-Technology Index rose 3.4 percent with hefty gains by iconic stocks including: Apple, 5.7 percent; Amazon.com, 4.9 percent; Cisco Systems, 5.8 percent; Google, 10.8 percent, IBM, 7.4 percent, and Microsoft, .6 percent.
Business software maker Oracle rallied 9.7 percent to $20.57 after its first-quarter earnings, released after the market close Thursday, beat Wall Street estimates.
European markets hopped on the bandwagon, with the FTSE 100 soaring 8.8 percent to 5,311, the German DAX adding 5.6 percent to 6,190 and the French CAC jumping 40 to 9.3 percent.
With investor confidence wavering, the Treasury took the extraordinary step of offering to insure the trillions of dollars in money-market funds and the Securities and Exchange Commission imposed a ban on the short-selling of 799 financial stocks for at least 10 days.
Investors’ confidence was shaken after a money-market fund managed by the Reserve “broke the buck” as the net-asset value fell below $1 because of exposure to assets of bankrupt Lehman Brothers. Money-market funds historically have been among the safest investments vehicles and investors use them much as they use savings accounts.
Asian stocks also roared ahead with Japan’s Nikkei 225 tacking on 3.8 percent to 11,921 and the Hang Seng Index vaulting 9.8 percent to 19,328.