U.S. Stocks Start Higher; Financial Shares Lead The Way

NEW YORK (MarketWatch) -- U.S. stocks rose early Monday as financial shares paved the way, with the sector bolstered by an $11.5 billion investment in Swiss banking giant UBS AG and investors riding a wave of optimism sparked by Tuesday's likely interest-rate cut.

The Dow Jones Industrial Average climbed 39.8 points to 13,665.4, with 22 of its 30 components ahead, led by J.P. Morgan Chase , up 1.6%.

The S&P 500 gained 3.53 points to 1,508.19 and the Nasdaq Composite gained 6.1 points to 2,712.26.

Investors looked ahead to Tuesday's rate decision by the Federal Reserve, debating whether to expect a quarter-point or half-point reduction.

If expectations of another Fed rate cut are realized, it would be the third meeting straight in which the central bank has opted to make such a move. .

On the New York Mercantile Exchange, January-dated light crude oil gained $1.33 to $89.61 a barrel.

Elsewhere on the NYME, gold futures rose, with the contract for February delivery gaining $14.9 to $815.1 an ounce. .

Active issues

Swiss banking giant UBS warned it would write down the value of its subprime mortgage holdings by another $10 million, potentially wiping out its profits for the year.

At the same time, the bank said it would get a capital injection of $11.5 billion from the government of Singapore and an unnamed investor in the Middle East.

European shares turned higher, with construction firms drawing a lift from Lafarge's deal-making plans. .

Asian stocks fell, with markets in Hong Kong leading the region lower. .

By Kate Gibson