U.S. Stocks Extend Surge As Oil Futures Drop

NEW YORK (MarketWatch) -- U.S. stocks on Thursday climbed for a third consecutive day, with financials leading the surge, as MasterCard Inc. predicted robust revenue growth and Bear Stearns Cos. shareholders approved a $2.2 billion buyout of the investment bank.

Investor sentiment was also bolstered by crude oil's dip below $130 a barrel.

"With oil down over 3%, the market took its cue and has rallied hard. We are on track to see the second monthly gain in the major indices despite the continued concerns on global inflation," said Brett Hryb, a portfolio manager at MFC Global Investment Management.

Up about 130 points earlier on, the Dow Jones Industrial Average was more recently at 12,695.31, up 101.28 points, or 0.8%.

Of the Dow's 30 components, all but four were trading in the green, led by Citigroup Inc. and Johnson & Johnson , both up 2.6%.

Intel Corp. fronted the blue-chip declines, off 1.2%.

The S&P 500 rose 11.24 points, or 0.8%, to 1,402.08.

Telecommunication services led sector gains on the S&P, recently up 2%, followed by financials, up 1.8%.

Energy led the two industry groups on the decline, off 2.3%.

The Nasdaq Composite climbed 27.74 points, or 1.1%, to 2,514.44.

Oil futures also saw volatile action, briefly jumping higher after the Energy Department reported supplies of crude fell by 8.8 million barrels to 311.6 million last week. More recently, crude-oil futures fell $4.53 to $126.5 a barrel. .

On the New York Stock Exchange, volume hit 842 million shares, and advancers topped decliners more than 2 to 1. On the Nasdaq, 602 million issues were exchanged, and advancing stocks overtook decliners nearly 2 to 1.

Active issues

Bear Stearns gained 1.7% in the wake of a 15-minute meeting that effectively ended an 85-year run of what had been the world's fifth-largest investment bank.

Shares of Countrywide Financial Corp. rose 8.2% after the lender set a June 25 date for a shareholders meeting to approve its sale to Bank of America Corp. . .

Retail reports were mixed: Sears Holdings shares dropped 2.4% after reporting a surprise loss, while shares of Costco Wholesale Corp. edged higher after the warehouse retailer reported stronger-than-expected results.

On the deal-making front, Bristol-Myers Squibb Co. said it would buy Kosan Biosciences Inc. in a transaction valued at about $190 million.

In other M&A activity, Trump Entertainment Resorts Inc. said it would sell Trump Marina Hotel Casino in Atlantic City to Coastal Marina LLC for $316 million.

In line with expectations, the Commerce Department revised its reading of first-quarter gross domestic product to an annual rate of 0.9%, above its previous estimate of 0.6%.

"As long as the number holds above 0.5% we are still skirting [with] the term 'recession.' Stronger would obviously be better," said Marc Pado, U.S. market strategist at Cantor Fitzgerald, who cited better inventory numbers and improved exports for the upward revision.

In a separate report, the Labor Department said unemployment claims rose 4,000 to 372,000, a bit more than forecast. .

By Kate Gibson