Wall St indexes rise on Countrywide takeover buzz
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NEW YORK (Reuters) - U.S. stocks ended higher on Thursday following news Bank of America is in advanced talks to buy struggling mortgage lender Countrywide Financial Corp .Financial stocks rose amid hopes that a possible sale of Countrywide would mark a turning point for beaten-down lenders and other mortgage finance companies crippled by the housing slump."A Bank of America deal for Countrywide gives people confidence that maybe the financials are not as toxic as people think if Bank of America sees value there," said Edward Bretschger, director of equity sales and trading at Calyon Securities in New York.The Dow Jones industrial average <.DJI> ended up 117.78 points, or 0.92 percent, at 12,853.09. The Standard & Poor's 500 Index <.SPX> was up 11.20 points, or 0.79 percent, at 1,420.33. The Nasdaq Composite Index <.IXIC> was up 13.97 points, or 0.56 percent, at 2,488.52.Financials may not enjoy the same gains on Friday after American Express Co said after the close of trading it is seeing signs of a weaker U.S. economy and is adopting a cautious view for 2008.Shares of AmEx fell 7.1 percent to $45.45 in extended-hours trading.Countrywide shares surged more than 50 percent to $7.75. Sources familiar with the matter told Reuters the No. 2 U.S. bank is in advanced talks to takeover the top mortgage lender. Rumors of a Countrywide bankruptcy earlier in the week dogged the company's shares, sending the stock to a low of $4.43 on Wednesday.The KBW Mortgage Finance index <.MFX> rose 6.8 percent. Other related sectors, such as homebuilders and investment banks, also gained.The market earlier took direction from remarks by Federal Reserve Chairman Ben Bernanke, who acknowledged that the economy was slowing sharply, but held out prospects of deep cuts in interest rates.As one of the biggest-weighted sectors in the stock market, the recent poor performance by financials was seen as the key reason for the market's poor start to 2008.Airline stocks, which had been hammered recently by recession worries and oil near $100 a barrel, surged after The Wall Street Journal reported Delta Air Lines Inc plans on Friday to ask its board for permission to begin merger talks with Northwest Airlines Corp and United Airlines parent UAL Corp .Delta shares jumped 18.2 percent to $15.98. Northwest shares surged 32 percent to $15.85 and UAL rose 23.7 percent to$32.19.Shares of Wal-Mart Stores Inc rose after the world's No. 1 retailer reported December sales that topped Wall Street estimates, but the gains came from sales of groceries and other necessities, suggesting that consumers are holding back from making discretionary purchases.Other retailers, such as clothing chains Men's Wearhouse and AnnTaylor Stores Corp cut their earnings outlooks on slowing consumer spending.Wal-Mart stock rose 3.2 percent to $48.40, but Men's Wearhouse shares dove almost 30 percent to $17.84 while AnnTaylor stock fell 15.5 percent to $19.95.(Additional reporting by Kristina Cooke)
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