U.S. Stock Indexes Turn Up As Oil Prices Reverse Lower

NEW YORK (MarketWatch) -- U.S. stocks on Monday climbed solidly higher, adding to last week's gains, as investors cheered crude's fall to under $114 a barrel.

"The averages are tracking tick for tick the price of oil," said Peter Cardillo, chief market economist at Avalon Partners. "With the exception of Fannie Mae and Freddie Mac, even the financials are enjoying a nice day today."

After falling more than 50 points early on, the Dow Jones Industrial Average was more recently up 86.46 points at 11,820.78, near its session highs, with 22 of its 30 components posting gains, led by Home Depot Inc. , up almost 8%.

Telecommunications firms also were among those gaining on the Dow, with Verizon Communications Inc. and AT&T Inc. both up nearly 3%. The gains came in the wake of a labor agreement between Verizon and two unions representing 65,000 workers. .

Alcoa Inc. led the decliners among the blue chips, with shares of the company recently off 2.3%.

The S&P 500 Index also shed early losses to rise 13.46 points to 1,309.78, with consumer-discretionary and financial shares leading the gains.

Energy and materials were the hardest hit among the S&P's 10 industry groups, down 1.7% and 1.1%, respectively.

The Nasdaq Composite Index gained 34.11 points to 2,448.21, with Amazon.com Inc. and chip manufacturers keeping the tech sector in the green.

Crude futures reversed course from an early rise, with the contract for September delivery recently sliding $2.08 to $113.12 a barrel after climbing as high as $116.9 a barrel earlier in the session. .

Volume on the New York Stock Exchange totaled 525 million shares, and advancing stocks outpaced those declining nearly 2 to 1. On the Nasdaq, 387 million shares changed hands, and advancers outpaced decliners, also by a 2-to-1 ratio.

U.S. stocks had ended sharply higher Friday as strength in the dollar triggered losses for commodities, notably oil. Transport and housing stocks led the advance, in which the Dow industrials rallied 302 points, the S&P 500 rose 30 points and the Nasdaq added 58 points.

"We believe the markets may have a few more weeks left on this current rally before financial-related issues take center stage again," said Paul Nolte, director of investments at Hinsdale Associates.

"The markets showed how interrelated they all are on Friday," said Marc Pado, a strategist at Cantor Fitzgerald. "I dare to say that what roiled the market on Thursday was equally responsible for rallying the market the next day."

UPS in news

On the M&A front, two prospective deals held the spotlight.

Waste Management Inc. hiked its unsolicited offer for Republic Services to $6.73 billion, or $37 a share.

A United Parcel Service Inc. executive said that a proposed bid for Dutch rival TNT NV would devalue the U.S. package-delivery giant, according to Reuters.

In addition, Bloomberg News reported that GATX Corp. has offered General Electric Co. more than $3 billion for its rail-services unit.

Berkshire Hathaway Inc.
late Friday said its second-quarter net income dropped 8% on sharply lower underwriting earnings, but shares of the company owned by billionaire Warren Buffett traded more than 1% higher in recent action.

The dollar, after climbing to a new five-month high against the euro, reversed ground and fell against the single currency and other major crosses. It's still far higher than on Thursday, when the European Central Bank acknowledged the current weakness of the eurozone economy.

Overseas, the Nikkei 225 ended 2% higher in Tokyo.

The pan-European Dow Jones Stoxx 600 index gained 1% to 292.10.

By Kate Gibson