Investors seek bargains in wake of market fall
NEW YORK » Stocks managed a moderate advance yesterday, staying afloat as signs of strength in corporate takeover activity, jobs and overseas markets allowed investors to stomach a sharp rise in wholesale inflation.
Wall Street still displayed nervousness, however, selling off briefly after former Federal Reserve Chairman Alan Greenspan rekindled investors' woes about subprime mortgages.
Trading was erratic at other points in the session, but most investors yesterday chose to pick up bargains following a 242-point drop in the Dow Jones industrials on Tuesday and a 57-point recovery on Wednesday that suggested the market is holding above the index's 12,000 mark -- at least for now.
"There's some optimism because the market had fallen quite a bit and it showed resilience yesterday, which is encouraging," Ed Peters, chief investment officer at PanAgora Asset Management Inc. in Boston, adding that the sentiment could shift on the Consumer Price Index's release today.
The Dow rose 26.28, or 0.22 percent, to 12,159.68. The Dow is 627 points below its closing high of 12,786.64, reached Feb. 20.
Broader stock indicators were also higher. The Standard & Poor's 500 index gained 5.11, or 0.37 percent, to 1,392.28, and the Nasdaq composite index advanced 6.96, or 0.29 percent, to 2,378.70.
The Russell 2000 index of smaller companies rose 7.93, or 1.02 percent, at 783.61.
Oil prices fell 61 cents to settle at $57.55 a barrel on the New York Mercantile Exchange, after the Organization for Petroleum Exporting Countries decided to keep output steady, as expected.
Bonds were little changed. The yield on the benchmark 10-year Treasury note was at 4.54 percent.
The dollar was mixed against other major currencies, and gold prices rose.
Stocks briefly retreated after Greenspan said at a conference in Boca Raton, Fla., that mortgage lenders' troubles are not yet spilling into the broader economy, but they could if home prices see another substantial decline.
Though the market has steadied itself since Tuesday's drop, market watchers aren't discounting the possibility of more seesawing as new data trickles in and as investors try to get a sense of how widespread the problems facing subprime lenders are.
Stocks got a boost from IntercontinentalExchange Inc.'s unsolicited $9.9 billion all-stock bid for CBOT Holdings. ICE's bid followed an already agreed-upon $8 billion takeover of CBOT by Chicago Mercantile Exchange Holdings Inc.
CBOT rose $28.86, or 17 percent, to $194.95; ICE fell $3.83, or 3 percent, to $128.10; and CME fell $31.09, or 5.5 percent, to $532.88.
In other takeover news, Cisco Systems Inc. agreed to acquire Web conferencing company WebEx for about $3.2 billion in cash, while General Electric Co.'s Capital Solutions business and Blackstone Group agreed to buy PHH Corp. for $1.69 billion.
Cisco fell 4 cents to $25.81, and WebEx rose $10.18, or 22 percent, to $56.38.
GE rose 21 cents to $34.52, and PHH rose $3.29, or 11.8 percent, to $31.10.