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 than was outlined in a JPMorgan Chase & Co. buyout deal a week
ago. Investors were also pleased by a stronger-than-expected housing report.
The Dow Jones industrial average jumped about 175 points.
Stocks rose after JPMorgan confirmed a New York Times report that the
company will boost its offer 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 $5.41, or 91 percent, to $11.37, while JPMorgan
rose 94 cents, or 2 percent, to $46.91.
Beyond the troubles of the financials, Wall Street was examining the housing
sector -- the root of much of investors' current angst. A real estate trade
group said sales of existing homes rose rather than declined in February, as had
been expected.
In midmorning trading, the Dow rose 175.52, or 1.42 percent, to 12,536.84
after rising more than 260 points on Thursday, the last day of trading before
the Easter holiday weekend.
Broader stock indicators also rose. The Standard & Poor's 500 index rose
20.06, or 1.51 percent, to 1,349.57, and the Nasdaq composite index rose 41.79,
or 1.85 percent, to 2,299.90.
Monday's gains follow a volatile but ultimately strong week for the markets.
The Dow and the S&P each showed gains of more than 3 percent for the week, while
the Nasdaq advanced more than 2 percent.
Bond prices fell sharply. The yield on the benchmark 10-year Treasury note,
which moves opposite its price, rose to 3.49 percent from 3.34 percent late
Thursday. The dollar was mixed against other major currencies, while gold prices
rose.
Light, sweet crude fell 39 cents to $101.47 per barrel on the New York
Mercantile Exchange. Oil prices declined amid speculation that a slowing U.S.
economy could damp demand.
Relief over Bear Stearns comes after the investment bank ran into trouble
with mortgage-backed securities and an evaporation of liquidity amid nervousness
in the credit markets. Wall Street has faced concerns for months that troubles
with soured debt and a lack of liquidity could take down banks.
The housing sector, which has also offered a steady drumbeat of mostly
negative news, gave investors a welcome lift. The National Association of
Realtors said sales of existing homes rose by 2.9 percent in February to a
seasonally adjusted annual rate of 5.03 million units. It was the biggest
increase in a year and Wall Street had expected a slight decline. Still, the
median home price fell by the largest amount on record.
Beyond housing, a report from Tiffany & Co. helped assuage some concerns
about the health of high-end consumers. The jeweler said loans it made to a
diamond company weighed on its fourth-quarter profit, but that earnings
excluding items were in line with Wall Street's expectations. Tiffany jumped
$5.14, or 13 percent, to $43.74.
Walgreen Co. rose $1.77, or 4.8 percent, to $38.55 after the drugstore chain
said its second-quarter earnings rose 5 percent as it controlled expenses to
offset slower sales growth.
Advancing issues outnumbered decliners by nearly 5 to 1 on the New York
Stock Exchange, where volume came to 257.4 million shares.
The Russell 2000 index of smaller companies rose 11.68, or 1.71 percent, to
693.10.
Overseas, Japan's Nikkei stock average closed down 0.02 percent. Markets in
Europe and in Hong Kong were closed for Easter Monday.
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