NEW YORK (AP) - Wall Street extended its big advance Monday as investors
applauded a new agreement that will give Bear Stearns Cos. shareholders five
times the payout that was set in a JPMorgan Chase & Co. buyout deal a week ago.
Investors were also pleased by a stronger-than-expected housing report, and sent
the Dow Jones industrial average nearly 190 points.
JPMorgan boosted investors' optimism by lifting its offer for Bear Stearns
to $10 per share from $2. The revised plan is aimed at soothing Bear Stearns
shareholders upset over JPMorgan's earlier offer, which was made at the behest
of the Federal Reserve when Bear Stearns was near collapse.
Bear Stearns shares jumped $3.42, or 57 percent, to $9.38, while JPMorgan
rose 58 cents to $46.55.
Beyond the troubles of the financials, Wall Street was examining the housing
sector -- the root of much of investors' angst. A real estate trade group said
sales of existing homes rose rather than declined in February, as had been
expected.
The Fed's move and even the housing figures appeared to alleviate some of
Wall Street's concerns about souring mortgage debt and lenders' resulting
hesitance to grant loans of any sort. The latest Bear Stearns deal signals that
investors' losses might not be as sizable as feared.
"The reason we've rallied the last three or four days is people are saying
'Hey, even if this paper is worth less than people think, the Fed is willing
come in and buy it at some level,'" said Charlie Smith, chief investment officer
at Fort Pitt Capital Group in Pittsburgh.
According to preliminary calculations, the Dow rose 187.32, or 1.52 percent,
to 12,548.64, after rising more than 260 points on Thursday, the last day of
trading before the Easter weekend.
Broader stock indicators also advanced. The Standard & Poor's 500 index rose
20.37, or 1.53 percent, to 1,349.88, and the Nasdaq composite index rose 68.64,
or 3.04 percent, to 2,326.75.
The Russell 2000 index of smaller companies rose 19.86, or 2.91 percent, to
701.28.
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