Wall Street gains amid financial, energy fears
NEW YORK » Wall Street stumbled through another volatile session but ended with a respectable gain yesterday after a multibillion dollar deal between Dow Chemical
and rival Rohm and Haas
helped offset concerns about the financial sector and energy costs.
Shares of mortgage finance companies Fannie Mae and Freddie Mac skidded lower on worries they will be forced to sell more new shares than anticipated to compensate for losses from the housing slump. Several retail banks and investment banks also dropped, particularly Lehman Brothers Holdings Inc.
The declines in financials came after Treasury Secretary Henry Paulson told Congress Wall Street can't expect the government to bail out troubled financial companies.
For market discipline to effectively constrain risk, financial institutions must be allowed to fail, Paulson said.
Meanwhile, crude oil prices rebounded by more than $5 to more than $141 a barrel.
Though investors found a reason to buy after Dow Chemical's $15 billion all-cash acquisition of the special chemicals maker Rohm and Haas, they are cautious ahead of quarterly earnings, in particular financial results due next week.
The Dow Jones industrial average finished up 81.58, or 0.73 percent, at 11,229.02. Oil's resurgence back above $141 a barrel briefly pulled the Dow into negative territory in afternoon trading.
Broader stock indicators also finished higher. The Standard & Poor's 500 index gained 8.70, or 0.70 percent, to 1,253.39, while the Nasdaq composite index rose 22.96, or 1.03 percent, to 2,257.85.
Advancing issues narrowly outnumbered decliners on the New York Stock Exchange, where volume came to 1.53 billion shares.
The Russell 2000 index of smaller companies rose 6.69, or 1.01 percent, to 670.44.
Light, sweet crude for August delivery rose $5.60 to $141.65 a barrel on the New York Mercantile Exchange on another missile test by Iran and worries about more supply disruptions in Nigeria.
Bond prices ticked higher as stocks fluctuated. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, slipped to 3.80 percent from 3.82 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.
The biggest decliner among the 30 Dow companies was American International Group Inc., which tumbled $2.15, or 8.2 percent, to $23.99. On Wednesday night, credit ratings agency Moody's Investors Service lowered its financial strength rating on AIG's mortgage insurance subsidiary.
Freddie Mac fell $2.26, or 22 percent, to $8, and Fannie Mae fell $2.11, or 13.8 percent, to $13.20. Lehman fell $2.44, or 12.4 percent, to $17.30.
Shares of Wachovia Corp. also sank Thursday, after the bank named a new chief executive Wednesday night. Wachovia fell $1.16, or 8.1 percent, to $13.13.