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OK, bulls, you can breathe easier.
The Dow Jones industrials halted a four-day losing streak as the stock market weathered disappointment with a rescue plan for Ambac Financial Group.
The finish still disappointed many investors because the market had opened with a strong rally, only to nearly disappear in the afternoon.
At the close, the Dow was up 41 points to 12,255; the blue chips had been up as much as 114 points soon after the open and, after a pullback, jumped gain to a gain of more than 100 points at noon ET. Then, the selling set in, and the struggle was on for the blue chips to keep their gain.
Meanwhile, the Standard & Poor's 500 Index was up 7 points to 1,334, and the Nasdaq Composite Index finished with a 13-point gain to 2,273.
The market was led by gains for energy and materials and metals stocks as commodity prices soared today. Crude oil closed at a record $104.52 after the Organization of Petroleum Exporting Countries decided not to boost output and the Energy Department reported a surprising drop in domestic oil supplies.
OPEC rebuffed its top consumer, The New York Times noted, arguing that the world was well supplied with oil and blaming financial speculators and mismanagement of the United States economy for the current high prices.
Energy stocks moved higher on the price jump. Chevron (CVX, news, msgs) was the top performer among the 30 Dow stocks with a 2.4% gain to $88.79. ExxonMobil (XOM, news, msgs) added 0.7% to $87.19. Anadarko Petroleum (APC, news, msgs) jumped 2.9% to $66.04. The Amex Oil Index ($XOI.X) was up 2% to 1,432.
Oil services shares also moved higher, in part because ExxonMobil said it will spend between $25 billion and $30 billion on capital and exploration projects this year, up from about $21 billion in 2007. Schlumberger (SLB, news, msgs) moved up 3.9% to $87.85. Offshore drilling company Transocean (RIG, news, msgs) added 3.2% to $141.16.
Gold, meanwhile, jumped $22.20 to a record closing high of $988.20. It hit an intraday high of $995.20 in the morning. Gold stocks moved sharply higher with the Amex Gold BUGS Index ($HUI.X) up 3.6% to about 502. Barrick Gold (ABX, news, msgs) rose 3.2% to $52.81.
Metals stocks also moved higher as commodity prices moved up, with U.S. Steel (X, news, msgs) jumping 5% to $114.69.
Stock Chart (Year)
Mosaic
Mosaic has jumped 656% since the end of 2005 as the price of wheat, for example, has more than tripled. Wheat futures closed up 36 cents to $11.24 a bushel today in Chicago.
Twelve Dow stocks finished with losses, with the financial stocks in the index falling the most. American International Group (AIG, news, msgs) was the worst Dow performer, falling 2.2% to $44.61 and subtracting 8 points from the index.
Ambac rescue plan underwhelms
The morning rally fell apart when the details of a rescue plan for bond insurer Ambac Financial Group (ABK, news, msgs) were released in the early afternoon. Trading in Ambac was halted around noon ET, when the stock was at $11.36. The plan reportedly includes selling $1 billion in new common stocks and $500 million in what was termed "equity units" -- notes that much converted into common stock by May 2011, The Wall Street Journal said.Stock Charts (Year)
American International Group
Bank of America
Such a plan would dilute existing shareholders' equity. When the stock reopened at 1:30 p.m., the stock tumbled, finishing down nearly 19% at $8.70.
Investors were disappointed in the plan, Reuters said, because they thought it signaled that banks were not committing their own funds to help rescue Ambac after weeks of negotiations.
"It looks like they had a close look at what was going on at Ambac and they backed away. Things may be bad there," said Peter Kovalski, portfolio manager at Alpine Woods Capital Investors, an Ambac investor.
- Video: The Ambac rescue plan
Ambac and fellow bond insurer MBIA (MBI, news, msgs) have been slammed by the mortgage-market meltdown. MBI shares were off 6.1% to $12.19.
The Ambac disappointment was a big reason for AIG's decline. Also hurt were JPMorgan Chase (JPM, news, msgs), down 1.1% to $38.74, and Bank of America (BAC, news, msgs), down 1.5% to $37.55. Citigroup (C, news, msgs) closed with a 5-cent gain to $22.15.
A blue Beige Book report
Also weighing on stock this afternoon was the Federal Reserve Board's Beige Book report that said the economy has slowed since the beginning of the year. Eight of the Fed's 12 districts cited softening or weakening in the pace of business activity, while the others referred to subdued, slow or modest growth.Residential real estate markets generally remained weak; commercial real estate markets around the country were somewhat mixed but appeared to be slowing, the report said. The Beige Book is released two weeks before each Federal Open Market Committee meeting. The FOMC's next meeting is March 18.
The good news that had sent the market off to such a strong start came from the Institute of Supply Management. The organization's survey on the service sector showed a reading of 49.3 in February, up from a dismal reading of 44.6 in January. While still indicating a contraction (as do all readings below 50) the ISM data this morning were nonetheless better than economists' expectations of 47.9.
The Dow was up 50 points when the survey was released and promptly jumped an additional 50 points.
Tech stocks rallied thanks in part to positive comments made Tuesday by Cisco Systems' (CSCO, news, msgs) CEO John Chambers, who told analysts that he was now "more comfortable" with the tech bellwether's long-term growth forecast of between 12% and 17% than he was a few months ago. Cisco was down 0.8% to $24.27.
More from MSN Money
Peter Lynch's -- and Fidelity's -- booboo
Mutual fund giant Fidelity Investments agreed today to pay an $8 million fine to settle charges that its stock traders improperly received gifts and entertainment, including private jet travel to golf and gambling outings and illegal drugs, from brokers seeking the firm's business.Among those named in the Securities and Exchange Commission's three-year investigation is Fidelity vice chairman and former star fund manager Peter Lynch, who used the firm's traders to obtain nearly $16,000 worth of free tickets to prize entertainment events, including Ryder Cup golf matches and concerts such as U2 and Santana.
The SEC said Fidelity traders failed to seek the best deals for customers because their choice of brokers for making trades was influenced by the kinds of gifts and other goodies those brokers gave them. Fidelity did not admit or deny guilt.
| Wed. | Tues. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $104.52 | $99.52 | $5.00 | 2.63% | 8.90% |
| Heating oil (per gallon) | $2.9431 | $2.7918 | $0.1513 | 3.64% | 11.09% |
| Natural gas (per million BTU) | $9.7410 | $9.3530 | $0.3880 | 3.84% | 30.18% |
| Unleaded gasoline (per gallon) | $2.6421 | $2.5291 | $0.1130 | 5.17% | 6.07% |
Oil prices rise on inventory surprise
Crude oil prices moved higher again this morning after a report showed inventories were lower than expected.Oil supplies fell by 3.1 million barrels last week, the Energy Information Administration reported; analysts had expected a rise of 2.1 million barrels.
Gasoline supplies showed a bigger-than-expected increase of 1.65 million barrels last week.
The OPEC cartel, meeting in Vienna, Austria, today, has said it won't boost production output despite the recent surge in oil prices.
"OPEC is concerned about the volatility of the market," OPEC President Chakib Kheil said at the meeting. "Many factors are contributing to this volatility, including a weaker dollar, speculation and the geopolitical situation."
Kheil, who is also Algeria's energy minister, suggested that crude oil prices have "detached" from the fundamentals of supply and demand.
Continued: Yahoo plays for time
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