Wall Street rallies; up more than 600 points since Monday

PHOTOGRAPHER: The Associated Press

Wall Street rallied strongly for a third straight day on today as hopes for relief for banks sent financial shares higher, bringing the rest of the market along with them.

Major stock indicators shot up about 3 percent after a policy-setting body for the accounting industry said it would make a long-awaited recommendation to Congress about easing financial reporting rules for beleaguered banks in three weeks.

The news accelerated a rally stoked earlier in the day after General Electric Co. got a credit rating cut that was tamer than anticipated. Also General Motors Corp. said it would not need the $2 billion government loan it previously requested.

Bank woes have been dogging the stock market since late 2007, when the housing market downturn led to a spike in loan defaults and drained demand from the credit markets.

That freeze-up sharply lowered the value of assets having anything to do with real estate or consumer credit — even though most of the loans themselves are still getting paid off. Those lower asset values have translated into huge losses for banks — which sent their stocks plunging.

The idea that the nation’s financial institutions might get some relief in how they value their assets was a signal to buy for many investors — particularly after Citigroup Inc. earlier this week revealed that it was profitable in January and February.

“We might find that the banks are not as bad, or not bad at all, if these assets are marked differently,” said Doreen Mogavero, president of the New York floor brokerage Mogavero, Lee & Co.

“There’s a lot of money on the sidelines, and a lot of people who’ve been waiting for the turn to come,” she said. With stocks driven down so far so fast, “these valuations are very appealing to a lot of people in the long-term.”

In late afternoon trading, the Dow Jones industrials rose 235.59 to 7,165.99, up considerably from the Dow’s closing mark of 6,547.05 on Monday.