US stocks jump as oil falls; Fed could extend credit protections

Business News

Jul 8, 2008, 23:04 GMT

New York - US stock indices recorded their biggest jump in a month as oil prices fell sharply Tuesday and the Federal Reserve opened the door to extending emergency lending into 2009. Fed Chairman Ben Bernanke said that the central bank's unprecedented lending to investment banks, set up in March at the height of the credit crisis for a six-month period, could be extended into 2009 if the financial sector's 'unusual and exigent circumstances continue to prevail.' Government-chartered mortgage lenders Fannie Mae and Freddie Mac, whose stock prices tumbled Monday after an analyst said they could need 75 billion dollars in fresh capital, rebounded on Bernanke's comments. A government regulator also said the two lenders were 'adequately capitalized.' JP Morgan Chase chief executive Jamie Dimon said that buyers were slowly returning to mortgage products as the credit crisis was easing, prompting strong gains in financial shares. Crude oil fell more than 5 dollars to 136.04 dollars per barrel in New York. The blue-chip Dow Jones Industrial Average jumped 152.25 points, or 1.36 per cent, to 11,384.21. The broader Standard & Poor's 500 Index was up 21.39 points, or 1.71 per cent, to 1,273.7. The technology-heavy Nasdaq Composite Index surged 51.12 points, or 2.28 per cent, to 2,294.44. The US currency stood at 63.84 euro cents and 107.42 Japanese yen. Gold fell 5.50 dollars to 923.30 dollars per fine ounce.

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