Alexa
  • Directory of Taiwan

Wall Street moves higher after sell-off; investors remain anxious about credit crisis

Wall Street moves higher after sell-off; investors remain anxious about credit crisis

Stocks rebounded Monday as investors moved back into banking stocks after last week's sell-off but investors appeared to remain cautious, expecting more fallout from the ongoing credit crisis. The Dow Jones industrial average was up more than 100 points.
The market was waiting to see if there would be more announcements from financial companies of write-downs of mortgage-backed securities and other debt instruments that have plunged in value since the summer. Late Friday, E-Trade Financial Corp. said deterioration in the value of its mortgage-backed securities has fallen significantly. The online brokerage said the weakness will lead to bigger-than-expected write-downs in the fourth quarter.
Meanwhile, troubled home lender Countrywide Financial Corp. said in a U.S. regulatory filing it could be "severely" limited if its credit rating drops into junk status. And Britain's HSBC Holdings PLC was seen as the next major financial institution to write down losses from exposure to the debt markets, according to a report from The Times of London. The bank will announce a $1 billion (euro0.69 billion) charge to its portfolio of high-risk subprime mortgages when it reports third-quarter results from its U.S. division, according to the report.
"After three days of large drops we're getting some bounce back but I wouldn't put much significant in it," said Subodh Kumar, global investment strategist at Subodh Kumar & Assoc. "People's expectations are being reduced to more realistic levels, whether it's credit and earnings."
Trading in some corners was light because of Veterans Day, with the government bond markets closed. This also could lead to higher volatility as institutional traders take positions ahead of economic reports, including readings on inflation, later in the week.
At midday the Dow rose 112.26, or 0.86 percent, to 13,155.00 after falling 4.06 percent last week.
The Standard & Poor's 500 index rose 8.58, or 0.59 percent, to 1,462.28, while the Nasdaq composite index rose 6.53, or 0.25 percent, to 2,634.47.
Advancing issues were about evenly balanced with decliners on the New York Stock Exchange, where volume came to 659.9 million shares.
The dollar rebounded against other major currencies, while gold prices fell.
Light, sweet crude fell $2.03 to $94.29 on the New York Mercantile Exchange. The drop came on reports that OPEC would discuss increasing its output at an upcoming meeting in a bid to cool record crude prices.
E-Trade plunged $4.59, or 53 percent, to $4, while Countrywide fell 32 cents, or 2.3 percent, to $13.51.
Citigroup Inc. led a recovery in bank stocks after last week's sell-off and was the biggest gainer among the 30 stocks that make up the Dow industrials. Citi rose $1.76, or 5.3 percent, to $34.86.
There was deal news: International Business Machinese Corp said it will buy software developer Cognos Inc for $5 billion (euro3.43 billion) , sending Cognos stock up $4.39, or 8.3 percent, to $57.37 as IBM shares dropped $5.86, or 5.5 percent, to $100.25,
And Constellation Brands Inc. said it will pay $885 million (euro607 million) for the U.S. wine business of Fortune Brands Inc. Constellation Brands stock dropped 67 cents, or 2.8 percent, to $22.99 as Fortune Brands shares rose 86 cents, or 1.1 percent, to $80.03.
Tyson Foods Inc. fell 67 cents, or 4.5 percent, to $14.08 after the world's largest meat company forecast earnings for this year that were below what analysts were expecting.