Bond Insurers, Natural Gas Drive Indexes Higher
Stocks climbed sharply Monday after battered bond insurers got a vote of confidence late in the day.
The NYSE composite staged a broad 1.6% climb. The Nasdaq finished up 1.1% with a leg up from biotechs and mortgage stocks.
Small caps and midcaps led, with the S&P 600 and 400 each gaining 2%. The S&P 500 rose 1.4%. The Dow jumped 1.5% as Alcoa () added 2.30 to 38.85 after agreeing to sell its packaging unit to a New Zealand buyer for $2.7 billion.
Trading ran 7% higher on the NYSE and down 8% on the Nasdaq, according to preliminary figures.
MBIA () jumped 2.40 to 14.58. Standard & Poor’s backed a triple-A rating for troubled bond insurers MBIA and Ambac (), and removed MBIA’s rating from Credit Watch, reporting that the company was making progress in raising capital.
The stock remains 79% below its October level. Ambac rose 1.70 to 12.41.
Bullish forecasts on natural gas from a Goldman Sachs analyst and from a Chesapeake Energy () executive sent natural gas-related energy plays soaring.
Southwestern Energy () gushed 5.89 to 67.61 on big volume. Shares are nailing new highs as they go for a sixth straight week of gains.
On the downside, MasterCard () fell 5.03 to 198.45 on heavy trading. Reports said competitor Visa had its sights set on the largest-ever U.S. public offering, aiming for $18.8 billion in proceeds when goes public probably within the next several weeks. MasterCard closed below its 10-week line for the first time since January. It closed in the upper half of its trading range, 13% below its December high.
3:15 p.m. Update: Stocks Extend Gains In Late Trade
By VINCENT MAO
Stocks ramped up in late trading Monday after Standard & Poor’s reaffirmed AAA credit ratings on bond insurers Ambac Financial and MBIA. MBIA jumped 12%, and Ambac rose 5%.
At 2:43 p.m. EST, the Dow had climbed 1.2%, the NYSE composite 1%, S&P 500 0.7% and Nasdaq 0.6%.
NYSE volume was tracking higher, and Nasdaq’s lower.
Energy issues powered up.
Stone Energy Corp. () gained 3.03 to a 52-week high of 49.49. It cleared a 48.63 buy point of an eight-week cup base. The oil and natural gas firm reports earnings on Wednesday. Analysts see profit rising 40% to $1.62 a share.
Group member Forest Oil () climbed 1.34 to 50.84. It may be adding a handle to its cup-shaped base. Forest’s earnings and sales growth accelerated in recent quarters.
On the downside, Strayer Education () dropped 4 points to 154.75. On Thursday, the school operator closed under its 200-day moving average for the first time in over a year.
Its industry group, Commercial Services-Schools, was among the biggest decliners. Group mates Apollo Group () dropped 1.93 to 60.92 and DeVry () fell 0.91 to 43.81. School operators have been under pressure in recent weeks as lenders tightened criteria for obtaining student loans.
1:15 p.m. Update: Stocks Hang Tough In Midday Trading
By VINCENT MAO
The major indexes were all higher in midday trading Monday. They battled back after slipping into mixed territory earlier.
At 12:48 p.m. EST, the Dow and NYSE composite were up 0.3% each. But that was off session highs of 0.9% and 0.8%, respectively. The S&P 500 and Nasdaq gained 0.2% each.
Volume was tracking a bit higher on the NYSE and slightly lower on the Nasdaq.
Fertilizer and oil-related groups were among the day’s best performers. Financial, consulting and Internet groups took heat.
Southwestern Energy () jumped 3.89 to a new high of 65.62. The oil and gas producer has improved its profit growth in the past two quarters. Analyst expect the trend to continue when Southwestern reports results on Friday. Earnings are slated to climb 80% to 36 cents a share.
Carrizo Oil & Gas () tacked on 1.24 to trade at 55.73. JPMorgan Chase started coverage of the much-smaller energy firm with a neutral rating. The stock is in its ninth week of a cup-shaped base. Its Relative Strength line is already at new highs ahead of price, indicating that it is outperforming the market.
Crude oil futures remained firm, edging up 29 cents to $99.10 a barrel at midday.
Meanwhile, Meridian Bioscience () gapped up and rallied 1.24 to 33.43. The maker of diagnostic test kits is working on a potential base-on-base pattern.
On the downside, Mechel () slumped 4.79 to 122.04 in brisk trade. The Russian mining and steel firm ran as high as 131.32 following a Deutsche Bank upgrade. At that peak, the stock was extended 104% above its 200-day moving average.
Medco Health Solutions () dropped 1.67 to 46.67 and sliced its 50-day moving average. The pharmacy benefits manager’s profit growth slowed to flat growth in the latest quarters.
11:15 a.m. Update: Stocks Climb In Firm Volume
By ALAN R. ELLIOTT
Investors ignored weak housing data to turn around an early slump and add to Friday’s late-day surge.
Both the NYSE and Nasdaq composites had added 0.7% at 10:52 a.m. EST. Trading volume climbed about 5% on both exchanges. The Nasdaq’s biotech index pulled ahead of the pack with a 2.4% advance. Midcaps and small caps slightly outpaced larger issues. The S&P 400 gained 1%, the small cap S&P 600 added 0.9%. The Dow added 0.8% and the S&P 500 followed with a 0.6% increase.
Stocks across Asia, except in China, moved higher. The Shanghai composite tumbled 4.1% and Hong Kong’s Hang Seng edged 0.2%. Tokyo’s Nikkei 225 blasted ahead 3.1% after Chinese news reports said China’s sovereign wealth fund would buy as much as $10 billion in Japanese stocks. South Korea’s Seoul composite posted a 1.3% gain.
The boards were green in Europe and the U.K.: London’s FTSE 100 gained 1.6% while France’s CAC-40 strode ahead 1.9%.
January existing home sales fell below forecasts, leaving the pace of sales just below December’s 10-year low. The National Association of Realtors showed 4.89 million units sold in January, down from an upwardly revised 4.91 million in December.
Potash Saskatchewan () headed on 3.09 to 160.09 in solid volume. The fertilizer producer broke out of a cup-with-handle base Feb. 12. It has advanced in five straight sessions, and is now 9% above the 147.20 buy point.
Itron () bolted 5.59 to 94.61 in double average volume. The meter-reading technology maker has climbed since posting better-than-expected Q4 sales and earnings Feb. 21. It is now back above its 10-week moving average, but 16% below its Oct. 30 high.
EOG Resources () tacked on 3.53 to 102.88 in solid volume. The move pushed the natural gas producer to new highs and began a sixth-straight week of gains.
10:15 a.m. Update: Stocks Dip In Early Trade
By VINCENT MAO
The major stock indexes headed slightly lower in early trading Monday.
At 9:57 a.m. EST, the NYSE composite and S&P 500 each fell 0.4%. The Nasdaq lost 0.3% and the Dow 0.2%.
Turnover was tracking sharply higher on both exchanges.
Freeport-McMoRan Copper & Gold () dropped 1.81 to 97.55 in brisk trading. The stock has found resistance near the 100 level.
Financials were again under pressure after Goldman Sachs cut earnings estimates on Citigroup (), JPMorgan Chase (), Bear Stearns (), Merrill Lynch () and Morgan Stanley (). Goldman expects “major write-downs in leveraged loans” and other subprime-related investments. The financial sector SPDR () fell 0.66 to 26.53.
Western Digital () rose 0.67 to 31.90 as it moved back above a 31.80 buy point of a cup-shaped base. The hard drive maker’s profit growth has accelerated in recent quarters. Analysts expect profit for the current fiscal year to nearly double.
Perfect World () gapped up and gained 1.78, or 7%, to 27.24 in fast trade. The Chinese online gaming firm swung to a Q4 profit of 34 cents a share, beating views. It also regained it 50-day moving average.
9:15 a.m. Update Stocks Head For Lackluster Open
By VINCENT MAO
Stock futures pointed to a mostly flat open Monday, as investors await more news of a potential bailout for troubled bond insurer Ambac Financial.
Nasdaq futures fell 2 points vs. fair value, S&P 500 futures slipped a fraction of a point and Dow futures lost 7 points.
On Friday, stocks turned higher in the final minutes of trading after CNBC reported of a possible rescue plan for Ambac, which faces billions in losses from insuring repackaged subprime mortgages. According to reports, a plan may be announced today or Tuesday. Ambac shares climbed 2% in the pre-market. Group mate MBIA () gained 1% in the pre-market.
In economic news, Fed Governors Randall Kroszner and Frederic Mishkin will give speeches at 9:50 a.m. EST and 3:30 p.m. EST, respectively.
Data on January existing-home sales will be out at 10 a.m. Economists expect a dip to 4.8 million units from 4.89 million units in December.
Genetech () jumped 8% in pre-market trading. On Friday, the Food and Drug Administration granted the biotech accelerated approval for its Avastin breast cancer drug.
Deutsche Bank downgraded General Motors () and auto parts maker BorgWarner () to hold from buy, citing a challenging environment. GM shares lost 2% in pre-open.
Lowe’s Companies () fell 3% in pre-market trading. Amid a slumping housing market, the nation’s second biggest home improvement retailer reported a 33% drop in Q4 profit. It guided Q1 earnings below consensus estimates.
Take-Two Interactive Software () soared 48% in pre-open trading. Over the weekend, the maker of the highly popular “Grand Theft Auto” game series rejected a $1.9 billion offer from rival Electronic Arts (). Electronic Arts fell 2% in the pre-market. Take-Two will release the fourth installment of “Grand Theft Auto” April 29.
Credit card firm Visa might raise close to $19 billion from an initial public offering it, experts say. That would make it the biggest IPO in U.S. history. In a Securities and Exchange Commission filing the company said it would offer 406 million shares at $37 to $42 per share.