The resemblance is uncanny. On Tuesday, US stocks had the biggest rally in five years, just like one week ago exactly, thanks to better-than-estimated earnings from Goldman Sachs (gs) and Lehman Brothers (leh) and a chunky 75 basis points of rate cut by the Fed. The fed funds rate is now at its lowest level since February 2005. The stock markets are quite relieved now that maybe things aren’t that bad after all; Lehman and Goldman did post decent earnings amidst the credit market turmoil. Well, at least till the next fear seeps in.

The Dow Jones Industrial Average (^dji) gained more than 400 points, or 3.5%, and all the 30 listed blue-chips closed higher. This made it the biggest one-day point gain since July 2002, though it was the biggest percentage gain only since last Tuesday. The Dow is now down only 6.6% from the start of the year. The Standard & Poor’s 500 Index (^gspc) surged 4.2% yesterday. Today Japan’s Nikkei 225 Stock Average (^n225) climbed 2.8% so far to 12,292.73.

Bear Stearns (bsc) shares surged 23% to close at nearly $6 after a sell-off Monday triggered by JP Morgan’s Fed-backed offer to buy the investment firm for the ridiculous price of $2 a share.

Watch out for Morgan Stanley (ms) earnings on Wednesday.

Posted in Categories: Stocks.

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