U.S. Stocks Pull Solidly Higher As MBIA Corrects Revenue
NEW YORK (MarketWatch) -- U.S. stocks stepped firmly higher Monday, gaining on news that bond insurer MBIA Inc. revised its first-quarter earnings report to show positive revenue rather than losses, and with investors also heartened by oil's retreat from record highs.
"The news out of financial stocks is, anything negative is almost a positive," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank. "The capital race continues, the write-offs continue, but the market reaction is different than it once was."
The Dow Jones Industrial Average climbed 132.4 points, or 1%, to 12,879.73 at last check, with 26 of its 30 components posting gains.
The blue-chip gains were broad based, led by Caterpillar Inc. , up 2.8%, and Wal-Mart Stores Inc. , ahead 1.9%.
The S&P 500 Index rose 14.5 points, or 1%, to 1,403.5, led by the financial and consumer-discretionary sectors, both up 2%.
Shares of MBIA rose 6.8% even after the firm reported a loss of more than $2 billion for the first quarter.
"It seems like they [MBIA] have enough capital to continue to operate, at least until the next go-round - I think the market is believing we are close to the end on the need to raise capital,"
In a statement posted on its Web site, MBIA also issued a correction to its earlier statement for total revenue generated in the first quarters of 2007 and 2008. .
S&P sector decliners included energy, recently down 0.2%, and health care, off less than 0.1%.
The technology-heavy Nasdaq Composite Index added 43.32 points, or 1.8%, to 2,488.9.
"Technology seems to have some legs coming out of earnings season, there was concern over inventory buildup, but in general, technology did better than expected," said Fitzpatrick.
The tech sector was also bolstered by Research In Motion Ltd. , shares of which were recently up 7.2% after hitting a high of $142.13 earlier on. The mobile-phone maker introduced a new BlackBerry model. .
On the New York Mercantile Exchange, oil futures slipped, retreating from last week's record-breaking 8% jump, with the contract for June delivery lately down 40 cents to stand at $123.83 a barrel. .
Gold futures closed lower, with the contract for June delivery closing at $884.8 an ounce, down 90 cents for the session. .
The dollar rose against most other currency rivals amid talk of "verbal intervention" by U.S. officials seeking to boost the greenback, with The Wall Street Journal reporting an attempt by the Bush administration to put a floor under the dollar. .
Volume on the New York Stock Exchange came to 2.3 billion, with advancing stocks outpacing those declining by more than 2 to 1. On the Nasdaq, more than 1.2 billion shares changed hands, as advancers topped decliners by 2 to 1.
U.S. stocks dropped sharply on Friday, after hefty losses from blue-chip insurance giant AIG and another record high for oil prices.
On Monday, AIG was among the stocks weighing on the Dow, recently off a further 3.5%.
"The market looks tired of rallying on bad news. After reaching up toward technical resistance, the averages began their pullback phase. While the momentum indicators are nearing neutral, it looks like we need oil to get off of our backs to focus on anything else," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
On the economic front, Chicago Federal Reserve Bank President Charles Evans said in a speech early Monday that the outlook remains uncertain because of instability in the credit markets and housing sector. .
Active issues
With oil prices creating a significant headwind, shipper FedEx Corp. late Friday warned that fourth-quarter profit would be hurt on fuel costs and weak volume.
"The unrelenting rise in the price of oil is impacting company statements and how investors are looking at stocks. FedEx was the latest in a long line of casualt stocks reporting that they can no longer absorb the rising cost of fuel without it affecting the bottom line," added Pado.
Shares of banking giant HSBC Holdings rose 2.9% after reporting a higher first-quarter profit, as emerging-markets growth offset $3.2 billion in U.S. loan impairments and $2.6 billion in global markets write-downs. The lender also sounded worries over inflation.
Sprint Nextel Corp. also reported red ink, with the carrier losing $505 million and the loss of more than 1 million of its most profitable customers in the first three months of 2008. The wireless carrier's shares fell 3.6%. .
Cablevision Systems Corp. reached an agreement to buy 97% of New York newspaper Newsday for $632 million plus $18 million in prepaid rent.
Investors bid shares of Cablevision lower by 2.7%.
In Europe, stocks were firm as investors bought into stocks positively geared to higher oil prices. .
Overnight, Asian markets ended mostly higher, reversing course and erasing losses earlier on. .
By Kate Gibson