U.S. stocks recovered from an early slump as BP Plc said it temporarily halted the flow of oil from its Gulf of Mexico well and Goldman Sachs Group Inc. rallied before settling the federal government's fraud lawsuit.
BP's U.S. shares advanced 7.6 percent. Goldman Sachs jumped 4.4 percent in regular trading after the Securities and Exchange Commission said it planned a "significant announcement" when markets closed. Once the US$550 million settlement was announced, Goldman shares extended their gains, rising another 2.9 percent.
The Standard & Poor's 500 Index reversed a loss of as much as 1.3 percent to close up 0.1 percent at 1,096.48. The Dow Jones Industrial Average fell 7.41 points, or less than 0.1 percent, to 10,359.31 to halt a seven-day streak of gains, its longest in three months.
"The finalization of financial reform and the Goldman speculation turned things around because they bring clarity and it means we can finally get back to the business of banks making money," said Frank Ingarra, a Stamford, Connecticut-based money manager at Hennessy Advisors Inc., which oversees about US$800 million. "The BP news is helpful too because it looks like we might get resolution on that issue as well, but the market is moving on headlines and it can make you seasick."
BP jumped after the company said oil has stopped flowing into the Gulf of Mexico for the first time in about three months as the company pressure tests its damaged Macondo well. The comments were made by Senior Vice President Kent Wells on a conference call.
"The BP news lifted all oil and oil-service stocks," said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc. in Boston.
BP rose 7.6 percent to US$38.92. An index of energy companies in the S&P 500 gained less than 0.1 percent, after falling as much as 1.6 percent.
Goldman Sachs advanced 4.4 percent to US$145.22 after the SEC said it would make an announcement following the close of U.S. stock exchanges.
After regular trading hours, the SEC said Goldman would pay US$550 million to settle the case. The litigation against Fabrice Tourre, a Goldman employee involved with the case, will continue, the SEC said. Goldman’s shares rose another 2.9 percent to US$149.37 in extended trading after the announcement.
"The case has been a stone in the shoe for Goldman and now it looks like they can get back to running," said Matt McCormick, a portfolio manager at Cincinnati-based Bahl & Gaynor Inc., which has US$2.7 billion under management.
U.S. stocks tumbled earlier as Federal Reserve reports on the Philadelphia and New York regions showed manufacturing growth slowed this month, suggesting corporate profit growth may not be sustained.