BackU.S. stocks gain for second day
U.S. stocks gain for second day
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The U.S. stock market climbed a second day on fading home-loan concerns after Bear Stearns Cos.’ earnings report and the acquisition of a mortgage company by General Electric Co. and Blackstone Group LP.
Citigroup Inc., JPMorgan Chase & Co. and Alcoa Inc. led gains in the Dow Jones Industrial Average and the Standard & Poor’s 500 Index. Dow Chemical Co. posted its biggest advance since July 2003 on expectations it will merge some assets with India’s Reliance Industries Inc.
Bear Stearns, the biggest U.S. underwriter of mortgage bonds, joined Lehman Brothers Holdings Inc. in assuaging concern that defaults among the riskiest borrowers will drag down profits at financial companies. The bank’s outlook helped lift 14 of the 16 homebuilders in S&P indexes and alleviate concerns raised by accelerating inflation and a prediction by former Federal Reserve Chairman Alan Greenspan that mortgage defaults will hurt the economy.
“If prices go down, we will have problems — problems in the sense of spillover to other areas," Greenspan said in remarks to the Futures Industry Association meeting in Boca Raton, Florida on 15 March 2007.
The S&P 500 gained 5.11, or 0.4% , to 1392.28. The Dow industrial added 26.28, or 0.2% , to 12,159.68. The Nasdaq Composite Index climbed 6.96, or 0.3% , to 2378.70.
Banks and other financial firms in the S&P 500 increased 0.9% after Bear Stearns said defaults among the riskiest borrowers won’t hurt its business. Bear Stearns itself added $3.21 to $148.50. Its first-quarter profit rose 8% as higher revenue from trading derivatives and debt of troubled companies overcame a slowing market for home loans. Lehman shares climbed $1.31 to $73.03.
Citigroup, the world’s largest financial-services company by market value, rose $1.05, or 2.1 percent, to $50.13 for the Dow’s largest gain. JPMorgan added 40 cents to $47.70.
PHH Takeover
PHH Corp., which provides mortgages marketed by American Express Co., Merrill Lynch & Co. and Charles Schwab Corp., rose $3.29 to $31.10. GE’s commercial-finance division agreed to buy the company for $1.8 billion and then sell its mortgage unit to Blackstone.
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