Stocks surged while credit markets remained strained today ahead of an expected House vote on the government's $700 billion financial rescue plan and after Wells Fargo Co. agreed to buy Wachovia Corp. in a $15.1 billion deal. The Dow Jones industrial average rose nearly 250 points.
Investors also appear relieved that the government's September employment report wasn't worse, although the Labor Department said payrolls shrank by 159,000, more than the 100,000 economists predicted. The nation's unemployment rate remained flat at 6.1 percent, as expected.
Investors are eager for unemployment to remain in check because widespread job losses could further curb consumer spending, which accounts for more than two-thirds of the nation's economic activity.
On a busy day, investors were awaiting resolution on the government's plan to buy up bad assets from banks and other institutions to shore up the financial industry and help resuscitate credit markets. Trading across markets has been volatile throughout the week based on investors' reading of whether the plan would win approval; on Monday, the House's rejection took Wall Street and Capitol Hill by surprise.
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The Senate subsequently passed a sweetened version of the plan that added tax breaks and raised the limit on federal deposit insurance from $100,000 to $250,000. The revote is expected to occur again during market hours, which could make for somewhat restrained trading until it is complete.
FDIC stands behind Citigroup-Wachovia deal
The head of the FDIC said the agency is standing behind the agreement it made with Citigroup Inc. to buy Wachovia Corp. despite Wells Fargo & Co.'s new $15.1 billion deal trumping Citigroup's plan.
Federal Deposit Insurance Corp. Chairman Sheila Bair said today the agency "stands behind its previously announced agreement with Citigroup."
The FDIC will review all proposals and work with the regulators of Wachovia, Citigroup and Wells Fargo "to pursue a resolution that serves the public interest," Bair said.
Citigroup, for its part, demanded that Wachovia call off its deal with Wells Fargo, saying its agreement was exclusive.
Under the $2.1 billion deal struck earlier, Citigroup agreed to absorb as much as $42 billion in losses from Wachovia's $312 billion loan portfolio. The FDIC agreed to cover losses above that level.
The surprise announcement early today by Charlotte, N.C.-based Wachovia that it had agreed to be acquired by Wells Fargo in the all-stock deal - without government assistance - upended what had appeared to be a carefully examined arrangement and caught regulators off guard.
The Federal Reserve, which has regulatory oversight of the three big banks, said it hasn't had time to review the proposed sale of Wachovia to San Francisco-based Wells Fargo but will work to ensure that all creditors and depositors of Wachovia are protected.
39 percent of early Ga. voters are black
The Secretary of State's office says 39 percent of Georgia's 194,138 early voters are black, signaling what could be a promising sign for Sen. Barack Obama's presidential campaign.
Georgia Secretary of State Karen Handel's office says as of Wednesday 74,961 early voters are black.
Figures from Oct. 1 show blacks make up 29 percent of registered voters in the state. They cast 25 percent of the total votes in the presidential election four years ago.
Last month, Obama's campaign pulled ads running in Georgia and shifted some of its paid campaign staff from Georgia to North Carolina while contending that it's not surrendering the state to Republican John McCain.
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