On Wednesday, the Dow increased by 490 points, the largest increase since March 2009, when the Dow hit its low point during the financial crisis. When the index closing at 12045.68 for the month, it showed an 0.8% increase in the month of November, and up 4% for the year. Three key developments led to the tremendous growth observed.
First, banks around the globe announced a coordinated plan to make US dollar funding cheaper for European banks. The announcement was well received in European markets, where the German index DAX jumped nearly 5%. However, this move "did not address the fundamental financial problems threatening the survival of the European currency union." Instead, it seemed more of a temporary move extend more time to Europe to plan its efforts on the preservation of the euro. Governor of Japan's central bank was quoted in saying that "the European sovereign debt problem will not be solved only with liquidity." Instead, what actions taken as crisis response will be crucial.
In other developments that contributed to the rise in markets on Wednesday, China indicated that it would loosen monetary policy by lowering the reserve ratio by 0.5% for banks, thereby enabling the increases in banks' lending activities. Lastly, private-business hiring increased by over 200,000 in November, well ahead of economic forecasts in the largest monthly gain this year.
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