Wall Street turned higher Tuesday as oil prices dropped sharply for the second straight day and investors were encouraged by the possibility...
NEW YORK — Wall Street turned higher Tuesday as oil prices dropped sharply for the second straight day and investors were encouraged by the possibility of more help for the ailing financial system.
The Dow Jones industrial average closed up 152.25 at 11,384.21, after moving in and out of positive territory during the trading session.
Microsoft, one of the 30 Dow stocks, fell 18 cents to close at $25.85 a share. Boeing, also a stock, gained $1.63 to $65.92.
Broader stock indicators rose as well. The Standard & Poor’s 500 index rose 21.39 to 1,273.70, while the Nasdaq composite index rose 51.12 to 2,294.44.
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Crude prices tumbled, falling $5.33 to settle at $136.04 a barrel on the New York Mercantile Exchange, bringing oil’s two-day drop to more than $9.
Speeches by Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and JPMorgan Chase Chief Executive Jamie Dimon gave the market some reassurance. Investors have been concerned this week about the health of government-backed lenders Fannie Mae and Freddie Mac; the two companies’ troubles helped send prices lower on Monday, but they also helped lead the rebound Tuesday.
“A lot of money is flowing into the previous laggards,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research, pointing to financials, health, and housing stocks. “It really seems like an oversold bounce.”
Fannie Mae and Freddie Mac bounced higher after closing at their lowest levels in a decade during the previous session over fears that they may need to raise fresh capital to remain in business. Both would need the money if a new accounting rule is enacted that would force them to put investments used as a main revenue driver off their balance sheets.
However, comments from both Bernanke and Paulson calmed market jitters about the two mortgage lenders. Shares of Fannie Mae rose $1.89, or 12 percent, to $17.62; and Freddie Mac jumped $1.55, or 13 percent, to $13.46. On Monday, Fannie declined 16 percent and Freddie slumped 18 percent.