Wall Street up on energy, easing credit strains
NEW YORK (Reuters) - Stocks rose on Monday as investors welcomed signs that credit strains were easing and comments from Federal Reserve Chairman Ben Bernanke raised hopes for more spending to help the U.S. economy.
With stocks at 5-year lows, thawing credit markets inspired investors to scour for bargains among beaten-down shares. Energy, utilities and materials companies led the way higher.
Shares of oil field services companies Halliburton Co and Weatherford International Ltd jumped after they posted better-than-expected quarterly earnings.
The energy sector also got a boost as the price of oil rose and analysts at Oppenheimer & Co raised recommendations on energy stocks such as Chevron and Exxon Mobil. Both Chevron and Exxon climbed more than 6 percent.
"We've seen some improvement in some credit metrics and Bernanke talking about a potential economic stimulus is beneficial," said Bucky Hellwig, senior vice president at Morgan Asset Management in Birmingham, Alabama.
"Energy stocks are also helping the market's advance here."
The Dow Jones industrial average was up 198.24 points, or 2.24 percent, at 9,050.46. The Standard & Poor's 500 Index was up 23.10 points, or 2.46 percent, at 963.65. The Nasdaq Composite Index was up 23.57 points, or 1.38 percent, at 1,734.86.
A sharp drop in the cost of banks borrowing dollars from each other raised hopes that global efforts to shore up the banking system were taking hold. A lack of confidence had spurred financial institutions to hoard cash.
Bernanke told a congressional hearing a second economic stimulus plan might be needed. The White House said it remained open to the idea.
Bernanke's comments mark the first time that the Fed chairman explicitly endorsed a second stimulus package. The government sent out about $100 billion in tax-rebate checks over the summer to try to jump-start the economy, but consumer spending has been sluggish since then.
Among energy stocks, Chevron's stock climbed 7.5 percent to $67.03, while Exxon's shares rose 7.1 percent to $72.93 on the New York Stock Exchange. The S&P energy index gained 7.3 percent.
Shares of Halliburton Co jumped 10.3 percent to $20.15.
The price of oil rose on expectations that OPEC may cut output this week to raise prices. U.S. front-month crude
rose $3.70 to $75.52 a barrel.
Last week, energy shares were among the worst hit on worries that a slowing economy would continue to curb demand for energy.
In deal activity, Exelon Corp, the largest U.S. nuclear power operator, made an unsolicited offer over the weekend to acquire NRG Energy Inc for $6.2 billion in stock. NRG surged 24 percent to $23.96, while Exelon slipped 1.8 percent to $53.51.
On Nasdaq, biotechnology shares, often seen as better able to withstand an economic downturn, rose. Their gains offset a drop in shares of big-cap technology companies. Gilead Sciences, up 6.9 percent at $46, contributed the most to the Nasdaq 100's gain.
But concern about the outlook for technology spending hit shares of Research In Motion. The BlackBerry maker's stock tumbled 7.2 percent to $54.78 on Nasdaq.
(Editing by Kenneth Barry)