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Record Wells Fargo Profits Sets Stage For Massive 250 Point Rally

April 9, 2009 4:32 PM EDT
Stocks rallied strongly today following news of record profits from banking giant Wells Fargo (NYSE: WFC). The news triggered a massive rally in financials, which bleed over into the broader market. The Dow rose 246 points, or 3%, Nasdaq added 62 points and the S&P 500 added 31 points, or nearly 4% moves in each. The Dow closed solidly above the key 8000 level, finishing the day at 8083.

This morning, Wells Fargo shocked the Street saying it expects to report record net income of approximately $3 billion for first quarter. On a per share basis, Wells Fargo sees EPS of $0.55, more than double the Wall Street consensus of $0.23. Wells Fargo said business momentum is strong and its Wachovia acquisition is exceeding expectations. The bank said it funded over $100 billion in mortgage loans in the quarter. News sent the stock up nearly 32% on the session.

Wells Fargo's rivals also benefited from the news; Bank of America (NYSE: BAC) added 35%, JPMorgan Chase (NYSE: JPM) jumped 19% and broadly the sector gained 15%, as represented by the ETF Financial Select Sector SPDR (NYSE: XLF). The 3X Financial Bull ETF from Direxion (NYSE: FAS) soared 40% today, while the 3X Bear (NYSE: FAZ) sunk 41%.

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