Stocks Close With Strong Gains As Energy, Tech Rally
Stocks ended higher as record oil prices boosted shares of Exxon Mobil and other energy producers, while technology shares rallied on optimism ahead of Cisco's earnings.
Major indexes rallied after vacillating between positive and negative territory for much of the trading day.
Market movers came primary from technology, where Google's good news was counterbalanced by bad news at Microsoft.
Tech bellwether Google got the day off to a solid start on news that Sanford C. Bernstein raised its share price target for the Web search company to $850. Research In Motion , the maker of BlackBerry devices, also took the spotlight after a brokerage raised its recommendation. The company said Monday it was marketing BlackBerry software geared towards mid-size and small businesses.
But Microsoft crashed the party, its shares slipping and pulling the rest of the market down after Goldman Sachs dropped it from its "buy" list.
As trading continued, though, energy and tech stocks rebounded and brought the major indexes higher.
"The market is putting on a damn good show today and it seems to be shrugging off all the other news," said Andrew Schwarz, founder and manager of AGS Specialist.
Housing Triggers Fears
Pessimism about the U.S. economy continues, with billionaire investor George Soros warning that the country was on the brink of a "very serious economic correction," according to Reuters.
"I think it will be a bigger slowdown than (Fed Chairman Ben) Bernanke is seeing," Soros said.
Analysts echoed his views, saying the housing downturn would be the trigger for a wider fall.
"In five out of six situations when you had a housing setback in the US, you had a recession. This one's no different," Anthony Gibbs, senior gilts broker at Vantage Capital Markets told "Worldwide Exchange."
Almost on cue, upscale home builder Hovnanian Enterprises said fourth-quarter net contracts and home deliveries fell, while cancellations rose amid the housing market's decline.
Shares of Beazer Homes gained as the builder, under an investigation of its mortgage origination business, announced it was suspending its dividend. And mortgage lender IndyMac badly missed estimates and warned that it would cut its fourth-quarter dividend if things did not improve.
Oil set another record, gaining more than $2 on a continued weak dollar and tightness in fuel stocks as it continued to march towards $100 a barrel. The bounce strengthened energy leaders ExxonMobil, Chevron, BP and ConocoPhillips.
Gold also gained on the weak dollar, hitting a three-decade high while raising the possibility that $900 was within sight.
Earnings reports were light, with Nortel, Archer Daniels, Valero and Emerson each beating analyst estimates.
Citigroup's shares, hammered by reports that the writedowns it may be forced to undertake because of the subprime crisis might be higher than previously thought, slipped as the bank's credit ratings were downgraded Monday by Moody's and Fitch.
The bank turned to someone with long-term experience in unwinding long-term debts, according to Reuters, appointing Richard Stuckey, the man who nine years ago helped unwind the bad debts of Long-Term Capital Management, as head of its subprime portfolio division.
Goldman Sachs shares gained, after the largest US brokerage once again issued a statement denying the institution would have to take billions in writedowns related to subprime losses.
--Reuters wire service contributed to this report.