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U.S. stocks surge on sovernment seizure

The markets are free only in theory…

Source: MarketWatch

U.S. stocks ended sharply higher Monday after the government seized mortgage giants Fannie Mae and Freddie Mac to prevent trillions of dollars in mortgage-backed securities from defaulting and to bring down mortgage rates nationwide.

Some investors, meanwhile, hope the unprecedented move might finally point to the light at the end of the tunnel for the credit crisis that has plagued markets for more than a year.

“For today at least, the Street is acting as though this could be the watershed event taking the crisis in the credit markets a step closer toward a resolve,” said Robert Pavlik, chief investment officer at Oaktree Asset Management.

The Dow Jones Industrial Average ($INDU) gained 289 points, or 2.6%, to end at 11,510, with 29 of its 30 components rising. The Dow first surged 350 points to a high of 11,570 in early trade before losing most of its gains and rallying again in the last hour of trade.

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