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By Ellis Mnyandu
NEW YORK, March 24 (Reuters) - U.S. stocks jumped on
Monday after a raised buyout offer for Bear Stearns Cos Inc
<BSC.N> suggested that financial stocks may have reached
bottom, especially in light of fresh data that fueled hopes
for a turnaround in housing.
Stocks rang up big gains for a second straight session
after JPMorgan Chase & Co <JPM.N> lifted its offer for Bear
Stearns to $10 a share from $2, helping alleviate concerns
that other investment banking shares could tumble.
JPMorgan's move also relieved worry that a prolonged fight
with disgruntled shareholders could have derailed the deal.
Financial stocks also got a boost from an article in the
Barron's newspaper suggesting that downtrodden bank stocks
could rebound by 10 percent to 20 percent by year end. Bear
Stearns shares, which at their session high were more than
doubled their Thursday's closing price, ended up 76.1
percent.
Citigroup <C.N>, the largest U.S. bank by assets, was
among financial sector standouts in the S&P 500, with its
shares up 3.5 percent, while shares of American Express Co
<AXP.N>, a credit card and travel services company, led the
Dow's financials with a 3.1 percent gain.
A surprising increase in sales of pre-owned homes last
month fueled optimism that the worst of the housing slump may
have passed. That ignited a rally in home building shares.
"More write-downs are expected in the financial space, but
people are starting to see a light at the end of the tunnel
and they suspect that it's not an oncoming train," said Peter
Kenny, managing director at Knight Equity Markets in Jersey
City, New Jersey. "At $2 a share for Bear Stearns, the
question was: 'What were the rest of the financials worth?'"
Just before the close, investors also got some more
encouraging news when the U.S. Justice Department approved the
proposed $4.22 billion purchase of XM Satellite Radio <XMSR.O>
by rival Sirius Satellite Radio <SIRI.O>. The deal still needs
approval from the Federal Communications Commission, which is
expected to follow the Justice Department's lead. For details,
see []
The Dow Jones industrial average <> climbed 187.32
points, or 1.52 percent, to finish at 12,548.64. The Standard
& Poor's 500 Index <.SPX> ended up 20.37 points, or 1.53
percent, at 1,349.88. The Nasdaq Composite Index <> shot
up 68.64 points, or 3.04 percent, to close at 2,326.75.
ROARING BACK FROM EASTER BREAK
Monday's gains, coming after a three-day Easter weekend,
helped Wall Street notch its first back-to-back advance for
March and its biggest 2-day jump in almost 4 months.
The S&P 500 achieved its highest close for the month, and
with this advance, the benchmark index trimmed its drop from
its October record closing high to a decline of 13.1 percent.
The Nasdaq capped its biggest two-day advance since March
2003.
A rally in the shares of the tech sector's four horsemen
-- Apple Inc <AAPL.O>, Research In Motion Inc
<RIMM.O><RIM.TO>, Google Inc <GOOG.O> and Amazon.com Inc
<AMZN.O> -- also helped carry the Nasdaq to its highest level
for March so far.
Technology shares' advance was driven in part by brokers'
positive comments on semiconductor companies.
Bear Stearns shares rose to $11.25 on the New York Stock
Exchange, where they hit a session high of $13.80 -- more than
double their closing price of $6.39 on Thursday, before the
Easter break. Those of Citigroup finished at $23.29. Shares of
American Express climbed to $47.41.
Those of JPMorgan, the No. 3 U.S. bank by assets, ended up
1.3 percent at $46.55 on the NYSE.
Home builders rallied after a report from the National
Association of Realtors showed a surprising jump in the
February pace of existing home sales in the United States. For
more see []. The Dow Jones home builder index
<.DJUSHB> shot up 5.3 percent.
Shares of Toll Brothers <TOL.N>, a luxury home builder,
gained 4.7 percent to close at $24.18.
TIFFANY SPARKLES AND TECHS SHINE, TOO
Retailers also surged after upscale jeweler Tiffany & Co
<TIF.N> posted an unexpectedly high quarterly profit and
forecast robust growth in markets outside the United States
and Japan. The S&P retail index <.RLX> was up 3.6 percent.
Tiffany shares jumped 10.5 percent to $42.65 on the NYSE.
Lehman raised its rating on Analog Devices Inc <ADI.N>,
whose stock jumped 4 percent to $29.47. Lehman also increased
its recommendations on Fairchild Semiconductor International
<FCS.N>, Intersil Corp <ISIL.O> and Microsemi Corp <MSCC.O> to
"overweight" from "equal weight."
Fairchild shares shot up 6.4 percent to $11.83 on the
NYSE, while on the Nasdaq, Intersil climbed 4.4 percent to
$26.49 and Microsemi advanced 3.4 percent to $23.66.
Shares of Apple Inc <AAPL.O>, maker of the iPod, climbed
4.7 percent to $139.53. The stock was the Nasdaq's top
gainer.
Web search company Google's shares closed up 6.2 percent
at $460.56, while BlackBerry maker RIM's tock gained 6.6
percent to $111.83 in Nasdaq trading. Web retailer Amazon.com
shares rose 3.8 percent at $75.95.
Trading was extremely light on the New York Stock
Exchange, with about 1.57 billion shares changing hands, well
below last year's estimated daily average of roughly 1.90
billion, while on Nasdaq, about 2.32 billion shares traded,
above last year's daily average of 2.17 billion.
Advancing stocks outnumbered declining ones on the NYSE by
about 4 to 1 and on the Nasdaq, by almost 3 to 1.
(Editing by Jan Paschal)
