Wall St climbs with Fannie and oil; Disney up late
NEW YORK (Reuters) - Stocks rose on Tuesday as Fannie Mae's (FNM.N) reassuring comments about the credit and housing markets buoyed financial shares, while record crude oil prices lifted shares of energy companies.
Speculation that Microsoft Corp (MSFT.O) could resume takeover talks with Yahoo Inc (YHOO.O) fed a rebound in technology shares. Yahoo gained 5.5 percent, while Microsoft rose 2.1 percent, leading the S&P 500's advance.
After an early retreat, the session turned positive when top executives of Fannie Mae, the largest U.S. home finance company, said the worst of the credit market turmoil erupting from the real estate slowdown may have passed. That mitigated earlier concern about its huge quarterly loss, and propelled a broad rally in financial stocks.
Fannie Mae climbed almost 9 percent, and smaller rival Freddie Mac (FRE.N) gained 7.1 percent.
Oil struck above $122 a barrel for the first time, carrying energy shares higher with it and outweighing a retreat in sectors sensitive to high fuel costs, such as airlines and retailers.
"When I came to work today, we thought Fannie Mae's stock will be trading south of $25, but somehow the investing public got news that they had a pretty positive conference call," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore, Maryland.
"There's a lot of people that are eyeing the financials right now, so if you're going to play the financials, Fannie Mae and Freddie Mac have to be among them."
The Dow Jones industrial average finished up 51.29 points, or 0.40 percent, at 13,020.83. The Standard & Poor's 500 Index ended up 10.77 points, or 0.77 percent, at 1,418.26. The Nasdaq Composite Index closed up 19.19 points, or 0.78 percent, at 2,483.31.
Immediately after the closing bell, there was more encouraging news that could help stocks extend their advance. Walt Disney Co (DIS.N) posted a stronger-than-expected quarterly profit, sending its shares up more than 3 percent in after-hours trade from their close at $33.73 on the New York Stock Exchange.
Disney, one of the world's largest media companies and owner of the ABC television network, ESPN all-sports cable TV network and Disney theme parks in Florida and southern California, is seen as a bellwether of consumer spending.
Cisco Systems Inc's (CSCO.O) shares jumped more than 2 percent after the bell from their Nasdaq close of $26.33 as the network equipment maker also posted a profit that topped estimates.
In the regular session, Fannie Mae shares finished at $30.81, while Freddie Mac shares closed at $27.33. Other financial standouts were insurer American International Group Inc (AIG.N), which rose 2.1 percent to $48.40, and JPMorgan Chase & Co (JPM.N), the No. 3 U.S. bank, whose stock added 0.4 percent to $48.20.
The optimism from Fannie Mae's comments also contributed to a rise in the shares of home builders, with the Dow Jones home construction index .DJUSHB up 2 percent for the day.
Shares of D.R. Horton Inc (DHI.N), the largest U.S. home builder, jumped 5.5 percent to $16.85 even as the company posted a quarterly loss of $1.3 billion and halved its dividend.
Energy shares rose after U.S. crude oil hit a record above $122 a barrel. A stronger-than-expected profit from independent oil and gas company Anadarko Petroleum Corp (APC.N) also buoyed the energy sector. Continued...
