NEW YORK, October 28, 2008 (AFP) – A frenzied buying spree sent US shares soaring Tuesday with the second-largest point gain in history for blue chips amid hopes for a rate cut and easing of a global credit crunch.
The Dow Jones Industrial Average rocketed 889.35 points (10.88 percent) to finish at 9,065.12. The gain was eclipsed only by a 936-point advance on October 13, and was the sixth largest in percentage terms for the blue-chip Dow.
The Nasdaq jumped 143.57 points (9.53 percent) to 1,649.47 and the broad-market Standard & Poor’s 500 index leapt 91.59 points (10.79 percent) to 940.51.
The surge came amid a strong rebound in global markets but a huge acceleration at the end of the session took market participants by surprise.
“There does not appear to be a specific news item to account for the surge,” analysts at Briefing.com said, adding that the gains were “compounded by short-covering.”
A so-called “short squeeze” occurs when traders with short positions, betting on falling stocks, are forced to buy to avert heavy losses. A similar short-covering rally pushed up Germany’s DAX by 11 percent Tuesday with many traders caught short on Volkswagen shares.
The market action came as th