U.S. Session Wrap - Stocks Rebound Towards The End Of The Session

Wall Street staged a come-back in the last hour and 15 minutes of trading, as traders perhaps grew a bit more optimistic regarding the TARP plan. The DOW, which had breached 9900, made back more than half of its 800 point loss.

"Most economists had been saying that the Treasury's plan to purchase distressed assets was insufficient for the problems at hand," said Matthew Carniol, chief currency strategist at TheLFB-forx.com. "However, the TARP legislation granted vast new powers to the Treasury and Federal Reserve, and those powers were not fully appreciated by market participants at the start of Monday's trading. For example, the Treasury now has the legal authority to re-capitalize the banks. Also, the Fed can now pay interest on reserves which essentially gives it the ability, should it decide to do so, to act as the 'counterparty of last resort' in the interbank market. Also, TARP allowed the Treasury to guarantee the Federal Reserve against any losses it may incur, which means the Fed can make both secured and unsecured loans at various terms. In essence, the ability is now there to back the interbank lending market with the full faith and credit of the U.S."

At the close of floor trading on the NYSE, the DOW was on 9955.50 after losing 369.88 points (-3.58%). The S&P closed on 1056.85, down 42.38 points (-3.86%) while the NASDAQ finished trading on 1862.96 with a loss of 84.43 points (-4.34%). Traders bought Treasuries in a bid for safety, but there never appeared to be too much of a panic at any point. Yield on the ten-year note fell 12.7 basis points to 3.473% while the two-year note's yield lost 13.2 basis points to 1.453%. It was a wild day for the dollar, with a 1.71% gain on the euro, a 1.43% gain on the pound and a 3.02% loss against the yen.

Crude oil for October delivery was recently trading down $4.58 (-4.9%) to $89.28 per barrel. Traders sold oil on speculation that a slowing global economy will crimp demand.

Gold for December delivery was recently trading up $33.00 (3.98%) to 861.19 per ounce as traders sought a safe haven.

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