U.S. Stock Indexes Up As Lawmakers Mull $700 Billion Bailout
NEW YORK (MarketWatch) -- Stock rose firmly Tuesday, snapping back after the prior session's losses, as investors tuned in to Treasury Secretary Henry Paulson's testimony on Capitol Hill as lawmakers haggled over the $700 billion bailout plan designed to clear banks of bad debt.
"Investors are beginning to fear that the bailout plan, as described on Thursday night and Friday, may be falling prey to politics. The political gamesmanship could alter or even delay the funding of the bailout, and that is only going to make the markets jitterier than they are now," said Kevin Giddis, managing director, Morgan Keegan & Co. Inc.
The Dow Jones Industrial Average gained 90.64 points to 11,106.33, with 27 of its 30 components trading higher in the early going, led by Intel Corp. , up 2.5%.
The Dow's financial stocks were mixed, with American Express and Citigroup Inc. off slightly, while JP Morgan Chase and Bank of America rose solidly.
Dow laggards were led by General Electric Corp. , off 2.9%.
The S&P 500 rose 9.2 points to 1,216.29, with financials leading gains among the index's 10 industry groups.
Early standouts include Fannie Mae , Freddie Mac and American International Group Inc ., with Fannie up 48.1%, Freddie climbing 40%, and AIG advancing 16.3%.
The technology-laden Nasdaq 500 climbed 20.06 points to 2,199.04.
Crude-oil futures gave up some ground after soaring more than $16 in the previous session, with crude for November delivery recently off 72 cents to $108.65 on the New York Mercantile Exchange. .
Gold futures also fell, slipping $8.60 to $900.4 an ounce in early action on Nymex. .
U.S. stocks tumbled on Monday, and oil prices shot $16 higher, as investors fretted about the details of the plan designed to get banks lending to each other again and raise fresh capital. The temporary ban on short selling also helped to keep volumes on the low side as hedge funds sat on the sidelines.
Federal Chairman Ben Bernanke and Paulson are testifying in front of the Senate Banking Committee on turmoil in the U.S. credit markets and the recent actions involving government-sponsored entities, investment banks and other financial institutions.
Bernanke will warn lawmakers of "very serious consequences for our financial markets and our economy," according to prepared testimony.
Securities and Exchange Commission Chairman Christopher Cox and Federal Housing Finance Agency Director James Lockhart also are due to testify.
In a related move, the Fed upped the maximum stake a minority investor can take in a bank holding company to 33% from 25%.
The Wall Street Journal reported that automakers, student lenders and others are lobbying to get their troubled assets included in the Treasury bank asset plan.
International stocks were lower, with the Hang Seng losing 3.9% in Hong Kong and the FTSE 100 dropping 2.7% in London. Japanese markets were closed on Tuesday
By Kate Gibson