Dow jumps 413 on stimulus hopes

By Charley Blaine and Elizabeth Strott

Stocks soared today as higher oil prices set off a big rally in energy stocks and as Federal Reserve Chairman Ben Bernanke endorsed the idea of a second economic stimulus package from Congress.

The Dow Jones industrials moved up 413 points, or 4.6%, to 9,259, its first close above 9,000 in four sessions.

The Standard & Poor's 500 Index was up 45 points, or 4.8%, to 985. The Nasdaq Composite Index was up 59 points, or 3.4%, to 1,770.

Today's gain was just the third for the Dow in October. But all three gains were 400 points or more, including the record 936-point gain on Oct. 13.

Wild, emotional trading has ruled financial markets since the end of August and especially after the collapse of investment house Lehman Bros. on Sept. 15.

Moreover, only 11 of the Dow's 14 gains since the end of August have more than 100 points, along with 16 of the 21 daily losses the blue chips have suffered in the same time period.

The rally came as new signals appeared that tight credit is easing. Rates on 3-month Treasury bills moved up to 1% today from 0.78% as it appeared some investors were interested in more aggressive returns. The London Interbank Offered Rate, which affects rates around the world, fell to 4.06% today from 4.42% on Friday. The rate peaked at more than 5.39% on Oct. 8.

Energy stocks took off when crude oil jumped 3.3% to $74.25. Traders were betting that the Organization of Petroleum Exporting Countries will cut production by up to 6% at an emergency meeting on Friday.

In addition, Wall Street liked earnings from oil service company Halliburton (HAL, news, msgs); shares were up 13.9% to $20.80. ExxonMobil (XOM, news, msgs), up 10.2%, to $74.99, and Chevron (CVX, news, msgs), up 11.6% to $69.61, contributed more than 113 points to the Dow's gain.

The Nasdaq was not quite as robust as the Dow or S&P 500 because of declines by such key stocks as Research In Motion (RIMM, news, msgs), down 8.6% to $53.91, SanDisk (SNDK, news, msgs), down 7% to $14.42, and Sears Holdings (SHLD, news, msgs), down 3.6% to $58.73.

If there was a downside to today's rally, it was volume: 1.2 billion shares traded directly on the New York Stock Exchange; 1.8 billion shares is normal. Nasdaq volume was 2 billion shares; it's been trading around 2.2 billion shares a day recently.

Still, the rally was very broad, with all 30 Dow stocks showing gains, along with 441 S&P 500 stocks and 89 stocks in the Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks.

Wal-Mart Stores (WMT, news, msgs), which had been a loser for most of the day, pushed into the black in the last hour of trading and closed at $54.43, up 1.2%. Rival Target (TGT, news, msgs) was down 3.3% to $38.07.

The rally came after stocks moved higher last week after four weeks of losses.

With today's close, the Dow and S&P 500 down 30% and 32% respectively on the year; the Nasdaq is off 33%.

But the indexes are up 17.5%, 17.2% and 14.8% from their intraday lows on Oct. 10.

Will the rally continue on Tuesday?

In a word: possibly.

Asian stocks moved higher Tuesday, and European stocks moved up at their open. But U.S. futures suggested a weak open on Tuesday, despite better-than-expected third-quarter profits from Dow component American Express (AXP, news, msgs).

American Express shares, which had been up 4.4% to $24.35 in regular trading, were up an additional 8.2% to $26.35 in after-hours trading.

American Express earned $861 million or 74 cents a share in the quarter, down from $1.1 billion or 90 cents a year ago. Revenue was $7.83 billion, up 6.3% from a year ago.

But Texas Instruments (TXN, news, msgs) may prove a drag on tech stocks after missing Wall Street estimates on third-quarter profits. The stock was down 6.2% to $16.87 after hours; it had been up 1.9% to $17.98 in regular New York Stock Exchange Trading.

• Top Stocks blog: Stocks to watch this week

TI earned $563 million, or 43 cents a share, down from $776 million, or 54 cents per share, in the year-ago quarter. Revenue fell to $3.39 billion from $3.66 billion. Wall Street had expected earnings of 44 cents a share and revenue of $3.4 billion. The company said consumers and businesses had cut their spending because of the weakening economy.

The company sees revenue falling in the fourth quarter and the first quarter of 2009.

Tomorrow will bring a heavy round of earnings, including reports from three Dow components: 3M (MMM, news, msgs), Caterpillar (CAT, news, msgs) and Pfizer (PFE, news, msgs).

Two big reports will come after Tuesday's close from Apple (AAPL, news, msgs) and Yahoo (YHOO, news, msgs). Apple, up 1.1% to $98.44, is expected to report earnings per share of $1.11 for its fiscal-fourth quarter, up from $1.01 a share a year ago.

Yahoo is seen reporting 8 cents a share in earnings, down from 11 cents a year ago. The company may also announce a new round of job cuts to cope with a difficult advertising market.

Energy prices -- New York close

	Mon.	Fri.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$74.25	$71.85	$2.40	-26.22%	-22.64%
Heating oil (per gallon)	$2.2099	$2.1329	$0.0770	-22.80%	-16.59%
Natural gas (per million BTU)	$6.7410	$6.7860	-$0.0450	-9.37%	-9.92%
Unleaded gasoline (per gallon)	$1.7201	$1.6661	$0.0540	-30.77%	-30.94%

Bernanke supports a new stimulus

Traders piled into stocks after Bernanke told the House Budget Committee that a fiscal package makes some sense. "We are in a severe slowdown, with severe consequences," Bernanke said.

"A fiscal package would not only boost overall spending and economic activity," he said, "but would also be aimed at redressing specific factors that have the potential to extend or deepen the economic slowdown."

• Read Bernanke's statement

Bernanke did offer some caveats to his support, The Wall Street Journal noted. Any stimulus should be "well-targeted," he said, and focused on ways to "help improve access to credit by consumers, homebuyers, businesses and other borrowers."

Democratic lawmakers are considering a stimulus package including infrastructure spending, aid to states, food stamps and jobless benefits.

The White House had been cool to the Democrats' proposals, but, late today, the administration said it would be open to discuss ideas.

• Video: See Bernanke's testimony

Adding to the decent mood on Wall Street: The Conference Board said leading economic indicators showed a 0.3% rise in September. It was the first monthly gain since April.

"The extreme volatility in the financial market, and the near freeze-up of credit, will no doubt weaken the economy further," said Ken Goldstein, labor economist at the Conference Board. "But latest data suggest that conditions in the nonfinancial economy are not falling apart."

Global markets make gains

The U.S. rally came after rallies in Europe and Asia.

In addition, credit markets appeared to be easing a bit. The London Interbank offered rate (Libor) was 4.06% today, down from 4.4% on Friday. The rate is closely watched as a gauge of banks' willingness to lend to each other.

London's FTSE 100 Index ($GB:UKX) rose 5.4%, and the broader Dow Jones Stoxx 600 Index added 3.6%.

European Central Bank President Jean-Claude Trichet on Sunday said the euro zone's banking system is slowly recovering.

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"I expect the banks to normalize their relationships, meaning that they start lending to each other and that they lend to their clients," Trichet said in an interview on French radio RTL.

Earlier, Japan's Nikkei 225 Index gained 3.6% and Hong Kong's Hang Seng Index was up 5.3%.

World leaders to meet about crisis

President Bush announced plans for a global summit after a meeting over the weekend with French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso. The three met at Camp David and then issued a joint statement, saying a summit would take place sometime after the U.S. election.

"As we make the regulatory institutional changes necessary to avoid a repeat of this crisis, it is essential that we preserve the foundations of democratic capitalism -- commitment to free markets, free enterprise and free trade," Bush said.

Sarkozy stressed the urgency of the situation, saying, "This is a worldwide crisis, so we must find a worldwide solution."

United Nations Secretary-General Ban Ki-moon offered the U.N. headquarters in New York City as a venue for the summit.

"The strongest reasons for believing that we are near the end of a very extreme panic is the overwhelming policy response that this unprecedented episode has now -- finally -- produced," Credit Suisse strategists wrote in a note to clients this morning. "In effect, we think that the notion that the U.S. economy is headed straight for a depression or liquidity trap has been undercut by aggressive policy measures."

Why OPEC may cut output

OPEC is looking at cutting output by 1 million to 2 million barrels a day, perhaps in stages, at its Friday meeting.

That would be a decline of 3% to 6% from current production, estimated at 32 million barrels a day.

OPEC doesn't like to hold emergency meetings; its next regular meeting had been scheduled for Dec. 17. The 50% decline in spot prices from a peak of $147.27 on July 11 has many OPEC members worried.

"Some countries like Venezuela and Iran need prices above $80 a barrel," Leo Drollas, deputy director of the Centre for Global Energy Studies, told Bloomberg News.

"The Saudis have a bottom price of about $65 a barrel, but they might go ahead with a cut to keep solidarity within OPEC."

Gasoline prices have come down with crude oil. The average price of a gallon of regular gasoline fell by 3.7 cents to $2.95, according to the AAA Fuel Gauge report. That's the first time gas has fallen below $3 a gallon since Feb. 15.

Gas prices hit an all-time high of $4.11 a gallon on July 17.

Alaska drivers pay the most, with gas at $3.90 a gallon. The cheapest gas is in Oklahoma, where the average was $2.54.

Exelon to buy NRG Energy

Electricity company Exelon (EXC, news, msgs) offered $6.2 billion for rival NRG Energy (NRG, news, msgs) this morning. The all-stock deal values NRG at $26.43 per share, a 37% premium to NRG's closing price on Friday.

In August, Calpine (CPN, news, msgs) rejected an $11 billion offer from NRG Energy as too low.

The combined company will be the biggest U.S. power company by assets.

Shares of NRG jumped 29.3%, to $25; Exelon shares was 0.2% to $54.59.

Earnings season continues

The holiday shopping season is almost here, and results from toy companies Mattel (MAT, news, msgs) and Hasbro (HAS, news, msgs) could shed some light on how they will fare.

Mattel this morning said it earned $238.1 million, or 66 cents per share -- up slightly from $236.8 million, or 61 cents per share, last year, but below Wall Street's estimate of 70 cents.

Sales of Mattel's famous Barbie doll fell 1% in the quarter; its American Girl doll sales rose 11%, however.

Hasbro, meanwhile, reported a 14% drop in third-quarter profit, to $138.2 million, or 89 cents per share. The results managed to top analysts' estimates of 86 cents per share.

Mattel closed down 2% to $14.16; Hasbro fell 4.2% to $28.87.

ING to get billions from Dutch government

Dutch financial company ING Groep said Sunday it will receive a $13.4 billion injection from the Dutch government.

In exchange, the government will get an 8.5% stake in the company and two seats on the company's board of directors.

"Our capital position was in line with previously targeted levels and regulatory requirements. However, market conditions have changed dramatically in recent weeks and have led to an internationally recognized belief that going forward, in this market environment, capital requirements for financial institutions should be higher," ING Chief Executive Michel Tilmant said in a statement.

Last week, ING said it will post a $670 million loss in the third quarter, its first in 50 years. ING also said it will cancel dividends for the rest of the year.

Andy Rosenbaum contributed to this report.

Short hits from the markets -- New York close

	Mon.	Fri.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	1.020%	0.780%	0.240	13.33%	-67.52%
5-year Treasury note yield	2.820%	2.833%	-0.013	-5.56%	-18.38%
10-year Treasury note yield	3.886%	3.938%	-0.052	1.54%	-3.69%
30-year Treasury bond yield	4.284%	4.312%	-0.028	-0.49%	-3.92%
Currencies
U.S. Dollar Index	83.475	82.835	0.640	5.19%	8.84%
British pound in dollars	$1.7135	$1.7319	-0.0184	-3.87%	-13.86%
Dollar in British pounds	£0.5836	£0.5774	0.0062	4.03%	16.09%
Euro in dollars	$1.3312	$1.3407	-0.0095	-5.59%	-8.92%
Dollar in euros	€ 0.7512	€ 0.7459	0.0053	5.92%	9.79%
Dollar in yen	101.50	101.60	-0.10	-4.27%	-9.25%
Canadian dollar in U.S. dollars	$0.838	$0.846	-$0.0079	-10.91%	-15.60%
U.S. dollar in Canadian dollars	$1.194	$1.182	$0.0119	12.25%	18.48%
Commodities
Gold	$790.00	$787.70	$2.30	-10.31%	-5.73%
Copper	$2.1165	$2.1795	-$0.06	-26.48%	-30.40%
Silver	$9.6900	$9.3350	$0.35	-21.06%	-35.05%
Corn	$4.1850	$4.0300	$0.15	-14.15%	-8.12%
Crude oil (NYMEX) (per barrel)	$74.25	$71.85	$2.40	-26.22%	-22.64%