Economic Outlook: Turbo drive

Economists may hope stock markets rise slowly, but investors have breached the storm walls in recent days, putting U.S. markets into turbo drive.

The Dow Jones industrial average tacked on 203 points Thursday, rose 17 points Friday and burst into hyper-drive, adding another 203 points Monday. This action follows 10 days in October when the DJIA gained or lost 100 points or more on 10 occasions. Since early September, the index has risen or dropped more than 1 percent on 18 days, The New York Times reported Monday.

Oil prices took the same recent leap of faith in October, jumping out of a holding pattern near $70 per barrel and settling into a higher plateau nearer $80 per barrel. Crude oil Monday closed at $79.23 per barrel in New York.

In the meantime, the price of gold hit a record $1,103.65 per ounce Monday while the dollar fell to 1 percent against major currencies. How and why? With interest rates low and government spending high, equities are rising while the dollar is dropping, the Times explained.

"If the world continues to heal, and investor confidence continues to rise, you will continue to see money leaving the safe, liquid arms of the U.S. Treasury and going back overseas in search of better returns and higher yields," Rebecca Patterson, global currency strategist at JPMorgan told the Times.

At the same time, "when you have 0 percent inflation, 0 percent interest rates, 0 percent money markets rates, and when you have metals and gold that have skyrocketed to astronomical levels, stocks look pretty good in comparison," said M. Jake Dollarhide, chief executive officer of Longbow Asset Management.

The U.S. Federal Reserve, which elected to keep its bank lending rate at 0- to 0.25 percent in its last policy meeting, said Monday nine out of 10 financial firms that failed stress tests conducted by U.S. Treasury last spring have increased their financial cushions to a passable level in the last seven months.

The financial firms, including Citigroup Inc. and Bank of America either sold assets, issued common shares or allowed preferred stock to convert to common shares, MarketWatch reported.

In total, the firms have raised $77 billion. The remaining firm of the 10 still in trouble is automotive financial firm GMAC, which is negotiating with the government for a new loan from the $700 billion Troubled Asset Relief Program.

In a sign of economic recovery and government guesswork, the U.S. Treasury said it would close a capital assistance program designed to help large financial firms during the crisis and never used.

"The Capital Assistance Program, which was set up to provide a mechanism for additional taxpayer support in financial institutions, will close today with no investments having been made," the Treasury said.

The program was part of a well-used $250 billion capital injection program that was expanded in February, MarketWatch reported. The expansion, however, proved unnecessary.

Asian markets turned mostly higher Tuesday. In Japan, the Nikkei 225 index gained 0.63 percent, while the Shanghai composite index rose 0.1 percent. The Hang Seng index in Hong Kong rose 0.27 percent, while the Sensex in India fell 0.35 percent.

In Australia, the S&P/ASX rose 1.26 percent.

In midday trading in Europe, the FTSE 100 in Britain rose 0.01 percent, while the DAX in Germany rose 0.66 percent. The CAC 40 in France fell 0.1 percent. The pan-European DJ Stoxx 50 fell 0.16 percent.