Wednesday July 23, 09:20 PM
Wall St rises on housing rescue plan, oil |
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By Ellis Mnyandu
NEW YORK (Reuters) - U.S. stocks rose on Wednesday, led by financial shares, including Freddie Mac and Fannie Mae, on hopes Washington will come through with a rescue for the housing market.
Oil prices, which are down $20 from their peak, extended their decline, adding to the positive tone and easing concerns about inflation and economic growth.
The House prepared to vote on a measure that will help the housing sector recover from its worst downturn since the Great Depression in the 1930s. The White House said President George W. Bush will sign the bill into law.
Shares of Freddie Mac jumped more 15 percent, while Fannie Mae climbed more than 20 percent. Under the pending bill, the two largest providers of housing finance would get an emergency financial lifeline from the government.
Banks shares also rose. Bank of America Corp, the No. 2 U.S. bank, was up more than 5 percent, while JPMorgan Chase, the No. 3 U.S. bank, gained nearly 5 percent.
"Financials are leading the market place up and they continue to be strong right across the board," said James Rosenthal, head trader at Punk Ziegel & Company in New York.
"The housing rescue package is certainly helpful for the banking industry as well. Fannie Mae and Freddie Mac paper doesn't need to be marked down."
The Dow Jones industrial average rose 66.84 points, or 0.58 percent, to 11,669.34. The Standard & Poor's 500 Index gained 10.53 points, or 0.82 percent, to 1,287.53. The Nasdaq Composite Index shot up 35.78 points, or 1.55 percent, to 2,339.74.
The S&P financial index shot up 4.5 percent.
Investors had feared that the further worsening of the housing market will result in further loan losses for financial institutions and drag on the economy's prospects.
Shares of Freddie Mac jumped to $11.21 on the New York Stock Exchange, as those of Fannie Mae climbed to $16.12.
Bank of America rose to $34.15, while JPMorgan rose to $42.67.
On Nasdaq, shares of Apple, the maker of the iPod and iPhone, rose more than 2 percent to lead the Nasdaq's advance after AT&T, the iPhone's exclusive U.S. network carrier, posted quarterly results that showed stronger-than-expected wireless growth.
Shares of AT&T, the largest U.S. telecommunications company and a Dow component, jumped 2.3 percent.
Home builders also headed higher, pushing the Dow Jones home construction index up more than 5 percent. Shares of luxury home builder Toll Brothers jumped 5 percent to $21.39.
The House is scheduled to vote later on Wednesday on the housing legislation, then the Senate will act. Senate approval would send the measure to Bush for his signature.
U.S. front-month crude dropped $2.19, or 1.7 percent, to $126.20 a barrel.
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