Genentech, Housing Lead Stocks Higher
Stocks moved into positive territory despite more signs of weakness in the housing market, as Genentech led pharmaceuticals higher.
The National Association of Realtors released numbers indicating that sales of existing homes fell to an annual rate of 4.89 million unitsin January and inventory soared. Yet the numbers were not as bad as analysts had indicated, and stocks began to climb following a jittery open.
Genentech reported accelerated government approval for its Avastin breast cancer drug and its shares gained nearly 10 percent early. The sector gained more than 3 percent in the first hour of trading.
Stocks also saw a major surge in Take-Two Interactive Software , which publishes the widely popular "Grand Theft Auto" video game, gave hope that the markets would start the week on a positive note but he major indexes began backpedaling after indicating a higher open. Video game giant Electronic Arts made an unsolicited $1.9 billion offer to buy Take-Two, which escalates the competition with Activision to buy the company.
Take-Two soared even though the company rejected the EAS offer.
Causing significantly more worry for investors was that a number of large banks lowered their earnings projections, and shares across the sector moved lower, led by Citigroup . Goldman Sachs predicted writedowns of $1 billion to $12 billion each for its competing brokerages, with Citi expected to take a hit at the high end of that number.
Speculation over troubled bond insurer Ambac's fate center on a recapitalization plan for the troubled insurer. Skepticism that such a deal would take place, though, was allayed on word that Dresdner Bank's head of investment banking operations said the bank plans to support a rescue package.
In earnings news, home improvement retailer Lowe'sreported lower fourth quarter earningsof 28 cents a share that nonetheless beat revised Wall Street expectations. Lowe's led gainers on the S&P.
Getty Images gained sharply on news that the Seattle-based seller of stock photography and video footage agreed to a deal that would take it private for just more than $2 billion.
Also, Visa was preparing what could be the largest initial public offering ever, with the world's biggest credit-card network indicating it may raise up to $18.8 billion in the eagerly awaited entry to the market.