U.S. Stocks Offer Opening Snap Back With House Vote Ahead
NEW YORK (MarketWatch) -- U.S. stocks rose at Friday's start, bouncing back after two days of losses, as a new buyout deal for Wachovia Corp. lifted spirits ahead of the House vote on the $700 billion bank rescue plan.
"Wells Fargo's bid for Wachovia is giving the market a lift this morning, but we all know that could change in a heartbeat," said Marc Pado, U.S. market strategist at Cantor Fitzgerald, pointing to the possibility of another House rejection of the rescue plan.
The Dow Jones Industrial Average gained 119.07 points to 10,601.92, with 27 of its 30 components ahead in the initial going.
Bank of America Corp. fronted the advance, up 4.8%, while Citigroup Inc. fell the most among the blue chips, losing 11.8%.
The S&P 500 rose 18.85 points to 1,133.13, while the Nasdaq Composite added 35.78 points to stand at 2,012.5.
Before the opening bell, the government said the U.S. economy lost 159,000 jobs in September, the worst decline in five years.
The dollar lost a bit of ground vs. the yen while oil futures dipped 18 cents to $93.79 a barrel.
Wachovia reached a deal to be bought by Wells Fargo Co. in a deal that won't require any Federal Deposit Insurance Corp. assistance, valued at $15.1 billion of Wells Fargo stock.
Citigroup had previously reached a deal to buy Wachovia's banking operations with FDIC help. Wachovia said the new agreement was "superior."
The bailout package will be put before the House for a second time on Friday. A White House spokesman said some House members have said they will switch their no votes, though the outcome of the vote is still in doubt.
Mickey Levy, chief economist for Bank of America, said the lender now expects a half-point rate cut from the Federal Reserve at or before the scheduled Oct. 28-29 FOMC meeting.
"We place a high probability on an inter-meeting move, perhaps as soon as next week as a complement to the enactment of the Treasury bailout legislation," Levy told clients.
Kansas City Fed President Thomas Hoenig, in a question-and-answer session late Thursday, said rates were "accommodative." Hoenig doesn't get to vote on interest rate decisions.
American International Group Inc. said it will focus on property and casualty insurance as it sells off assets to pay off the Fed's $85 billion loan.
Its stock was up 9.3% early on.
U.S. stocks dropped sharply on Thursday as jobless claims and factory orders data overshadowed the Senate passage of the bailout passage. The Dow industrials dropped 348 points, the Nasdaq Composite stumbled 92 points and the S&P 500 lost 46 points.
By Kate Gibson