By Ellis Mnyandu
NEW YORK (Reuters) - Stocks rose on Monday as a brokerage's positive comments on energy companies spurred bargain-hunting in the beaten-down sector, while lower interbank lending rates gave investors hope the credit logjam might be easing.
Chevron and Exxon Mobil led the Dow industrials higher and the energy sector contributed the most to the S&P 500's advance after analysts at Oppenheimer & Co raised recommendations on the energy companies' stocks, as well as a raft of other sector plays.
Both Chevron and Exxon jumped 6 percent.
Investors also took comfort from comments by U.S. Federal Reserve Chairman Ben Bernanke, who told a congressional hearing a second economic stimulus plan might be needed. The White House said it remained open to such an idea.
"I think what you're seeing is some bargain hunting as investors try to evaluate how deep the economic recession is going to be," said Giri Cherukuri, head trader at OakBrook Investments LLC, which oversees $1.3 billion in Lisle, Illinois.
The Dow Jones industrial average rose 148.78 points, or 1.68 percent, to 9,001.54. The Standard & Poor's 500 Index climbed 18.72 points, or 1.99 percent, to 959.27. The Nasdaq Composite Index gained 14.06 points, or 0.82 percent, to 1,725.35.
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.
Fears of recession have driven stocks down to five-year lows.
Bernanke's comments mark the first time that the central bank chairman explicitly endorsed a second stimulus package. The government sent out about $100 billion in tax-rebate checks over the summer to try to jumpstart the economy, but consumer spending has been sluggish since then.
Chevron's stock climbed 6.3 percent to $66.29, while Exxon's shares rose 5.9 percent to $72.08 on the New York Stock Exchange. The S&P energy index gained 6.3 percent.
On the earnings front, shares of Halliburton Co jumped more than 7 percent to $19.66 after the oil field services company reported a quarterly profit that topped estimates.
Oil prices gained on Monday and boosted the stocks of energy companies as crude rose on expectations that OPEC may cut output this week to raise prices. U.S. front-month crude rose $1.70 to $73.55 a barrel at midday in New York.
Last week, energy shares were among the worst hit on worries that a slowing economy would continue to curb demand.
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 20.2 percent to $23.24, while Exelon slipped 4.4 percent to $52.08.
On Nasdaq, biotechnology shares, often seen as better able to withstand an economic downturn, advanced. Their gains offset a drop in shares of big-cap technology companies. Gilead Sciences, up 5.3 percent at $45.31, 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 nearly 9 percent to $53.85 on Nasdaq.
(Editing by Jan Paschal)
(Reporting by Ellis Mnyandu)
