Dow, S&P 500 gain on housing plan as Nasdaq dips
NEW YORK (Reuters) - The Dow and S&P 500 rose on Friday, capping a dismal November with a four-day rally, as financial stocks rallied on optimism over a proposed rescue for struggling homeowners and on heightened expectations for more interest-rate cuts.
Tech stocks were left behind, however, after Dell Inc (DELL.O) fell by its most in seven years after a disappointing outlook, driving a 0.3 percent drop in the Nasdaq for the day. Investors also appeared to be rotating money from tech, until recently a market leader, and into the downtrodden financial sector.
Banks and mortgage lenders were the standouts following a report that the U.S. Treasury will soon unveil a plan to help stem the subprime mortgage crisis.
The interest-rate-sensitive plays, including Citigroup Inc (C.N) and JPMorgan Chase & Co (JPM.N), also got a lift from comments from Federal Reserve Chairman Ben Bernanke, who said late on Thursday a resurgence in financial strains in recent weeks had dimmed the outlook for the U.S economy, raising speculation that policy-makers are willing to lower benchmark rates again.
"The Fed wants to see that the mortgage interest-rate resets during the course of 2008 are not as onerous or as crippling as they can be," said Georges Yared, founder and chief investment officer of Yared Investment Research in Wayzata, Minnesota. "The Fed is acting in defense of the consumer."
Investors were also emboldened by the week's big drop in oil prices, which was within $1 of the $100-a-barrel mark at the beginning of the week, feeding fears that high gasoline prices would depress consumer spending.
The Dow Jones industrial average .DJI gained 59.99 points, or 0.45 percent, to end at 13,371.72. The Standard & Poor's 500 Index .SPX was up 11.42 points, or 0.78 percent, at 1,481.14. The Nasdaq Composite Index .IXIC was down 7.17 points, or 0.27 percent, at 2,660.96.
GOOD WEEK, BUT GRIM NOVEMBER
For the week, the Dow climbed 3 percent, the S&P 500 gained 2.8 percent and the Nasdaq gained 2.5 percent.
But even with the weekly advance, both the Dow and the S&P 500, marked their worst monthly drop in five years.
For the month of November, stocks lost ground: The Dow slid 4 percent, the S&P 500 fell 4.4 percent, and the Nasdaq sank 6.9 percent, its worst monthly drop since July 2004, when it slumped 7.8 percent.
On Friday, U.S. crude oil for January delivery dropped $2.30, or 2.5 percent, to settle on the New York Mercantile Exchange at $88.71 a barrel -- the lowest settlement since October 24's close at $87.10.
BANKS AND LENDERS RALLY
Shares of Bank of America Corp (BAC.N), the No. 2 U.S. bank, and JPMorgan Chase, the No. 3 U.S. bank, topped the list of major contributors to the S&P's advance.
Bank of America shares gained 3.4 percent to $46.13. Continued...
