NEW YORK (AP) — Wall Street’s recovery from last month’s plunge gained momentum yesterday, with stocks rising as investors looked past widening cracks in the subprime lending sector and bought in response to another parade of acquisition deals.
New Century Financial Corp.’s warning that its lenders had suspended financing initially overshadowed acquisition news involving companies such as Dollar General Corp. and Schering-Plough Inc. Investors have dealt with concerns that a blowup among companies making loans to consumers with poor credit could spill into other industries.
“The market actually has handled the cutoff by financing arms to New Century in a fairly decent way,” said Frederic Dickson, market strategist and director of retail research at D.A. Davidson & Co. “While there are some subprime jitters, it hasn’t spilled broadly either into the financial sector or across the entire market.”
He said investors appeared to grow emboldened by the merger deals announced yesterday. Technology shares also received a boost ahead of a midquarter update from Texas Instruments Inc., which tightened its financial targets after the closing bell.
The Dow Jones Industrial Average rose 42.30, or 0.34 percent, to 12,318.62.
Broader stock indicators also rose. The Standard & Poor’s 500 Index advanced 3.75, or 0.27 percent, to 1,406.60, and the Nasdaq Composite Index rose 14.74, or 0.62 percent, to 2,402.29. The Russell 2000 Index of smaller companies rose 3.88, or 0.49 percent, to 789.
Bonds rose amid concerns about subprime lenders; the yield on the benchmark 10-year Treasury note fell to 4.56 percent from 4.59 percent late Friday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude settled down $1.14 to $58.91 per barrel on the New York Mercantile Exchange.
Yesterday’s trading saw the low volatility that has characterized much of the past eight months. Many sessions since the worldwide sell-off that began Feb. 27 have seen much more choppiness as investors hunted for signs of where the market was headed.
The day’s buyout news offered support for stocks amid the din over subprime lenders. The concerns about the subprime sector followed a relatively successful week on Wall Street. Stocks etched out gains last week as U.S. and overseas markets managed to regain some sense of stability following the sharp pullback late last month.
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