STI lower at midday

Stocks: Best day in 14 months

The Dow Jones industrial average (INDU) gained 405 points, or 3.9%, the average's biggest one-day point and percentage gain since March 23, 2009.

The S&P 500 index (SPX) surged 49 points, or 4.4%. It was also the best day on a point and percentage basis since March 23, 2009.

The Nasdaq composite (COMP) rallied 109 points, or 4.8%. It was the Nasdaq's best day on a point basis since Oct. 28, 2008, and on a percentage basis since March 23, 2009.

Markets around the globe advanced on the plan as investors breathed a sigh of relief that aggressive action was being taken after months of mounting concern. The euro gained versus the dollar, and the dollar gained against the yen.

Treasury prices slipped, boosting the corresponding yields, as investors pulled money out of the safe-haven investment and put it into riskier assets, such as stocks.

U.S. investors were reacting to the size and scope of the rescue, said Ron Kiddoo, chief investment officer at Cozad Asset Management.

"It shows Europe is willing to do something fairly dramatic to address these problems," he said. "It doesn't solve everything, but it's a good step."

But the selling was exacerbated last Thursday after computer trading on more than 300 stocks sparked a massive selloff. The Dow tumbled 998.50 points, the index's biggest loss ever on an intraday basis, before it recovered about two-thirds of the drop. On Friday, trades of 296 stocks were cancelled.

In the aftermath of that selloff, the Securities and Exchange Commission and the major stock exchanges all agreed Monday on the basic framework to strengthen "circuit breakers" and methods for handling erroneous trades.

The selling that plagued the market for a week or two prior to the Thursday battering started to wear out, setting markets up for a bounce, said Gary Webb, CEO at Webb Financial Group.

But with Thursday's so-called "flash crash" and continued concern about European debt, the major indexes finished the week down for the year to date. Having gotten past that, stocks could be set up for a decent bounce for a few weeks, Webb said.

"I think investors around the world are reacting well to this bailout because they see that our bailout worked," he said, referring to the $787 billion U.S. stimulus plan approved last year. "There's a price to be paid down the line, but the fact that it did stabilize our markets is reassuring them that the EU bailout will stabilize the euro."

Volatility: Last week the CBOE Volatility index, or the VIX (VIX), Wall Street's fear gauge, rallied to 13-month highs as investors priced in a bigger retreat. But on Monday, the VIX slumped 12 points, or almost 30%, to end at 28.96 as investor anxiety dissipated.

"The news out of Europe is positive, but I'm not sure how healthy today's move is," said Paul Brigandi, vice president of trading at Direxion Funds. "It shows we're back in a volatile period. We had a violent selloff last week and this huge rebound today."

He said that the moves in the market and in the VIX show investors are uncertain about how to factor in all the so-called headline risk, including Greece, the Gulf oil spill and the latest for Goldman Sachs, which is fighting off fraud charges.

Additionally, "It shows we're getting away from fundamentals like the economy and corporate profits and just focusing on the day-to-day news," he said.

Rescue plan: The European rescue package, valued at close to $1 trillion over three years, includes government-backed loans, the expansion of a stabilization program and funding from the International Monetary Fund (IMF)

Under the deal, the 16 European Union (EU) countries will provide a collective $570 billion in the form of government-backed loans. The European Commission, the EU's governing body, will provide another $76 billion under an already existing stabilization fund. The IMF will provide at least $284 billion.

Additionally, the European Central Bank said it would start buying government and corporate debt. The ECB was said to have started buying euro zone government bonds Monday, although details were not available.

Finally, the Federal Reserve joined central banks in Canada and Europe in re-establishing a program that makes more U.S. dollars available for interbank lending.

On the move: Gains were broad based, with 30 Dow components rallying.

Big contributors to the Dow's gains were aerospace firms Boeing (BA, Fortune 500) and United Technologies (UTX, Fortune 500), heavy-equipment maker Caterpillar (CAT, Fortune 500), tech firms IBM (IBM, Fortune 500) and Hewlett-Packard (HPQ, Fortune 500), as well as 3M (MMM, Fortune 500), McDonald's (MCD, Fortune 500) and Procter & Gamble (PG, Fortune 500).

Market breadth was negative. On the New York Stock Exchange, winners topped losers by almost 19 to 1 on volume of 1.86 billion shares. On the Nasdaq, advancers beat decliners by seven to one on volume of 2.87 billion shares.

Fannie Mae: Mortgage backer Fannie Mae (FNM, Fortune 500) asked for another $8.4 billion from the federal government Monday after reporting a massive first-quarter loss. The losses were due to accounting changes and the continued weakness in the U.S. housing market.

Fannie Mae, along with fellow mortgage company Freddie Mac (FRE, Fortune 500), was put under government conservatorship during the height of the financial crisis in fall 2008. It already owed the government $76.2 billion.

Last week, Freddie Mac asked for another $10.6 billion after posting an $8 billion quarterly loss.

World markets: Stocks around the globe finished higher. In Europe, France's CAC 40 gained 9.7%, Germany's DAX added 5.3% and Britain's FTSE rose 5.2%. On Monday, the Bank of England said it will keep its key interest rate unchanged at a low 0.5%.

Asian markets rallied as well, with Japan's Nikkei adding 1.6% and Hong Kong's Hang Seng gaining 2.5%. On Friday, the Bank of Japan pumped $22 billion into financial markets to ease fears about the impact of the Greek debt crisis.

Dollar and commodities: The euro gained 1% against the dollar, continuing to recover after having fallen to a 14-month low versus the U.S. currency last Thursday. The dollar rose 1.7% versus the yen.

U.S. light crude oil for June delivery gained $1.69 to settle at $76.80 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery slid $9.60 to settle at $1,200.80 per ounce.

Bonds: Treasury prices tumbled, pushing the yield on the 10-year note to 3.57% from 3.43% Friday. Treasury prices and yields move in opposite directions. 

Asian markets extend losses

Stocks start May strong

The Dow Jones industrial average (INDU) rallied 143 points, or 1.3%. The S&P 500 index (SPX) gained 15 points or 1.3%, surpassing 1,200, a key psychological level. The Nasdaq composite (COMP) rose 37 points or 1.5%.

Investors welcomed reports that Greece will receive a substantial bailout from the European Union (EU) and the International Monetary Fund (IMF), as it set to rest worries that the country's ballooning deficit would drag on the euro and exacerbate problems for other debt-plagued nations. Portugal, Italy, Ireland, Greece and Spain - the so-called PIIGS, have all struggled to pay back debt.

"We're seeing a reflex rally after last week's selling," said Jamie Cox, managing partner at Harris Financial Group.

"The bailout happened and it's reassured us," he said. "You put Greece into the background, that means there is a template for all other EU bailouts."

The Greek bailout, along with better-than-expected reports on manufacturing and construction spending in the U.S., overshadowed reports that China is boosting its bank reserves to counteract inflationary pressure. Concerns about China limiting its lending dragged on markets earlier this year.

Investors may have also taken some comfort from comments from influential investor Warren Buffett over the weekend. Buffett said he doesn't think Goldman Sachs did anything wrong in the sale of subprime-related securities at the center of an SEC fraud charge and potential criminal probe from the Justice Department. Buffett's Berkshire Hathaway has a big investment in Goldman Sachs' preferred stock.

Stocks tumbled Friday, posting a weekly decline for the first time in nine weeks, after reports that Goldman Sachs is facing a criminal probe sparked analyst downgrades and a selloff in the financial sector.

Monday, Goldman Shares (GS, Fortune 500) gained 5%, rising along with a variety of financial shares. The KBW Bank (BKX) sector index added 1.7%.

However, gains were broad-based, with 29 of 30 Dow stocks advancing, led by Boeing (BA, Fortune 500), United Technologies (UTX, Fortune 500), Chevron (CVX, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), IBM (IBM, Fortune 500), 3M (MMM, Fortune 500) and Caterpillar (CAT, Fortune 500).

Auto sales: Auto and truck sales were being released throughout the session. Ford Motor (F, Fortune 500) posted a 25% year-over-year sales gain in April, the fifth straight month of 20% or more improvement. General Motors (GM) said sales rose 6% from a year ago and fell 2% from last month.

Toyota Motor (TM) said sales for April rose 24% versus a year ago, while Honda Motor (HMC) said sales rose 13% versus the previous year.

Greece: Worries that Greece would default on its debt have dragged on the stock market for weeks, particularly with a May 19 deadline looming for the country to pay back over $11 billion.

But over the weekend, the EU and the IMF agreed to provide $146 billion in aid over three years, with up to $40 billion available in the first year. The loans were granted after Greece announced it was taking on new "austerity" measures to cut expenses and bring down its budget. On Monday, influential Germany voted to provide $40 billion over three years, saying that letting the country go bankrupt would destabilize the euro.

Airlines: UAL (UAUA, Fortune 500)'s United Airlines said it will buy Continental (CAL, Fortune 500) in a $3.2 billion stock deal that will create the world's largest airline, overtaking current leader Delta Air Lines (DAL, Fortune 500).

The combined company will use United's name and Continental's logo and is expected to have annual revenues of $29 billion.

Apple: Apple (AAPL, Fortune 500) said it sold 1 million iPads in one month, with sales outpacing the first month for the iPhone by roughly two to one.

World markets: In overseas trading, European markets rose, with France's CAC 40 up 0.3% and Germany's DAX up 0.5%. London's FTSE was closed.

Asian markets were mixed, with Hong Kong's Hang Seng index down 1.4% and Japan's Nikkei up 1.2%.

The dollar and commodities: The dollar fell versus the euro and gained against the yen.

U.S. light crude oil for June delivery rose 4 cents to settle at $86.19 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $2 to $1,182.70 per ounce.

Bonds: Treasury prices slipped, raising the yield on the 10-year note to 3.70% from 3.66% Friday. Treasury prices and yields move in opposite directions.

Market breadth was positive. On the New York Stock Exchange, winners topped losers by over three to one on volume of 1.18 billion shares. On the Nasdaq, advancers topped decliners by over two to one on volume of 2.34 billion shares.  

He has spent 70 years without food or water

AHMEDABAD

The yogi, Prahlad Jani (picture), is sealed in a hospital in Ahmedabad where he is under 24-hour observation by 30 doctors and will be subjected to a series of medical tests.

“The observation from this study may throw light on human survival without food and water,” said Dr G Ilavazahagan, director of India’s Defence Institute of Physiology and Allied Sciences.

“This may help in working out strategies for survival during natural calamities, extreme stressful conditions and extra-terrestrial explorations like future missions to the Moon and Mars by the human race.”

The experiment started on April 22 and will take 15 to 20 days.

“Jani says he meditates to get energy. Our soldiers will not be able to meditate, but we would still like to find out more about the man and his body,” said Dr Ilavazahagan.— A team of military doctors backed by India’s national defence research centre is studying an 83-year-old holy man who claims to have spent seven decades without food or water.

AFP

Jo-ann Hu ang and Millet Enrique z

Dow in triple-digit rally

Dow plunges 213 points, breaks 11K

The Dow Jones industrial average (INDU) tumbled 213 points, or 1.9%, closing below 11,000, a key psychological level. The Dow ended the previous session at its highest point in 19 months.

The S&P 500 index (SPX) fell 28 points, or 2.3%, closing below 1,200, a psychological level traders look at. The Nasdaq composite (COMP) slid 51 points, or 2%.

Stocks were flat to lower in the morning as Goldman Sachs sought to defend itself on Capitol Hill against allegations it profited from the housing market collapse. But news that ratings agency Standard & Poor's had cut Greece and Portugal's debt ratings overshadowed everything else, giving investors a reason to retreat on the back of an 8-week advance.

"We're seeing the fear factor kick in about Greece and Portugal," said Peter Cardillo, chief market economist at Avalon Partners. "That's rattling the market."

He said that fear was also reflected in the so-called flight to quality as investors poured money into bonds and the euro fell to a new low for the year.

That was reflected by a jump in the CBOE Volatility index, Wall Street's so-called "fear gauge." It spiked 24%, hitting the highest point since February. Typically a surge in the VIX corresponds with a selloff in stocks.

Greece: Standard & Poor's cut its ratings on Greece's long-term debt status to "BB+" with a negative outlook from "BBB+." The double-B plus rating is considered to be speculative or "junk," and reflects the ratings agency's concern about Greece's long-term ability to get out from underneath the its current fiscal crisis. S&P cut Greece's short-term debt even lower.

S&P also cut Portugal's long-term debt ratings by two notches and the short-term rating by one notch, but did not lower the debt to junk status.

The cost of insuring both Greece and Portugal's debt rose to record highs following the news.

Worries about the fiscal health of Greece and the other so-called PIIGS have weighed on the stock market on and off since the start of the year as investors worry the weakness will destabilize the euro and hurt global growth. The PIIGS are Portugal, Ireland, Italy, Greece and Spain.

Blankfein, in prepared testimony, denied that the company sought to profit from the housing market collapse, an allegation lawmakers have made recently.

Fabrice Tourre, the trader charged in the Securities and Exchange Commission's fraud case against Goldman Sachs defended himself, saying he categorically denied the SEC's allegations.

On the move: Financials, energy and technology, the three biggest movers of the market in terms of sectors, all fell.

Goldman Sachs (GS, Fortune 500) gained 1%, but other bank shares plunged, with the KBW (BKX) Bank index losing over 3%. Sliding oil prices dragged on energy stocks, including Dow components Exxon Mobil (XOM, Fortune 500) and Chevron (CVX, Fortune 500).

Declines were broad based, with 28 of 30 Dow components falling. In addition to the Dow's financial and energy components, other losers included heavily weighted tech stocks Hewlett-Packard (HPQ, Fortune 500) and IBM (IBM, Fortune 500), aerospace and defense names Boeing (BA, Fortune 500) and United Technologies (UTX, Fortune 500) and heavy-machinery maker Caterpillar (CAT, Fortune 500).

Caterpillar shares rallied Monday after the company reported better-than-expected earnings and boosted its 2010 profit forecast.

Market breadth was negative. On the New York Stock Exchange, losers beat winners five to one on volume of 1.68 billion shares. On the Nasdaq, decliners topped advancers by over four to one on volume of 2.77 billion shares.

Bernanke spoke at the first meeting of President Obama's bipartisan debt commission.

Federal Reserve: The central bank policymakers were meeting Tuesday and Wednesday with an announcement on interest rates and the outlook due Wednesday afternoon.

The Ben Bernanke-led Fed is expected to hold interest rates steady at historic lows near zero. However, what the bankers say in the statement about the outlook for the economy and interest rates will be scrutinized.

Investors will also pay attention to whether the Fed provides more details about how it plans to continue unwinding programs put in place to prop up the economy during the financial crisis.

Company news: Ford Motor (F, Fortune 500) reported a better-than-expected first-quarter profit that rose from a year earlier. But shares slumped after the company's revenue growth was shy of expectations.

After the market closed Monday, Texas Instruments (TXN, Fortune 500) reported quarterly sales and earnings that topped estimates and rose from a year earlier. Shares were slightly lower.

3M (MMM, Fortune 500) reported higher quarterly sales and earnings that topped estimates thanks largely to strong international sales. The Dow component, considered to be a good barometer of the economy because of the breadth of its business, also boosted its 2010 profit forecast.

However, 3M said growth in Asia and Latin America are the drivers of that forecast and that the U.S. economic recovery will be patchy. Shares gained 0.6%.

Fellow Dow component DuPont (DD, Fortune 500) also reported higher quarterly sales and earnings that topped expectations, and lifted its 2010 profit forecast. But investors took a sell-the-news response and sent shares nearly 4% lower.

With 40% of the S&P 500 having reported, earnings are on track to have grown 50% from a year earlier and revenues 11%, according to the latest info from Thomson Reuters.

Roughly 82% of earnings have topped estimates. Should that figure hold up, it would be the highest percentage of companies topping earnings in Thomson's history.

The dollar and commodities: The dollar gained versus the euro and fell against the yen.

U.S. light crude oil for June delivery fell $1.76 to settle at $82.44 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $8.20 to settle at $1,162.20 per ounce.

World markets: In overseas trading, European markets slumped, with London's FTSE down 2.6%, France's CAC 40 down 3.8% and Germany's DAX down 2.7%. Asian markets were mixed, with Hong Kong's Hang Seng index down 1.5% and Japan's Nikkei up 0.4%.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.70% from 3.82% late Monday. Treasury prices and yields move in opposite directions. 

Stocks sputter after hitting '10 highs

The Dow Jones industrial average (INDU) ended just above unchanged, with Caterpillar (CAT, Fortune 500) and a few other stocks countering the weakness in financials.

The S&P 500 index (SPX) lost 5 points, or 0.4%, after ending Friday's session at a 19-month high.

The Nasdaq composite (COMP) lost 7 points, or 0.3%, after ending the previous session at the highest point in almost two years.

Stocks seesawed through the session as investors welcomed Caterpillar's earnings and forecast but showed reluctance at the start of a busy week. Financial concerns continued to drag on the market.

Stocks gained Friday after a surprisingly strong new-home sales report, with the Dow, Nasdaq and S&P 500 all gaining on the week as well. The Dow has now gained eight weeks in a row, the longest wining streak since January 2004.

Although there are no economic reports due Monday, the pace picks up later in the week. The Fed's two-day policy meeting concludes Wednesday, with a statement due in the afternoon, while reports on jobless claims, consumer confidence and gross domestic product are also on tap.

While the trend for the market remains up, there are still headwinds, including any fallout from Goldman Sachs' fraud charge, the debate over financial reform and Greece's lingering debt issues.

Financials: Goldman Sachs (GS, Fortune 500) shares fell ahead of a Senate hearing Tuesday aimed at investigating the role investment banks played in the 2008 financial crisis. Goldman CEO Lloyd Blankfein, Fabrice Tourre, the only Goldman employee named in the SEC's fraud charge, and other Goldman employees will be among those testifying.

E-mails released Monday showed that Tourre -- who helped create a bond deal tied to subprime mortgages that regulators say defrauded investors -- knew the complex deals were bunk.

The federal government said it will sell up to 1.5 billion shares in Citigroup (C, Fortune 500), in its latest move toward withdrawing some of the support for big banks it put in place during the height of the financial crisis. The sales are equivalent to about one-fifth of the government's ownership stake and would reduce its holdings to roughly 22% of the company.

Shares plunged 5%.

Other bank shares fell too, dragging the KBW Bank (BKX) sector index down 3%.

Quarterly results: Heavy-machinery maker Caterpillar (CAT, Fortune 500) reported higher quarterly earnings that beat estimates on weaker revenue that missed estimates. The company said that the economic outlook is improving, but that it is cutting its outlook for housing starts by 20% due to the weak labor market. The Dow component also boosted its 2010 profit forecast. Shares gained 4.2%.

Whirlpool (WHR, Fortune 500) reported higher quarterly sales and earnings that beat estimates due to stronger sales of its appliances both domestically and abroad. The company also reported a stronger 2008 profit. Shares gained 14%.

With roughly 34% of the S&P 500 having reported results, earnings are currently on track to have risen 50% from a year ago, while revenues are on track to have risen 11%, according to tracker Thomson Reuters.

So far, about 83% of earnings and 81% of revenues have topped estimates.

Corporate news: Hertz (HTZ, Fortune 500) said it will buy Dollar Thrifty in a $1.2 billion cash and stock deal that combines the two car rental companies.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by eight to seven on volume of 1.23 billion shares. On the Nasdaq, decliners topped advancers by a narrow margin on volume of 2.38 billion shares.

The dollar and commodities: The dollar gained versus the euro and yen.

U.S. light crude oil for June delivery fell 92 cents to settle at $84.20 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose 30 cents to settle at $1,153.70 per ounce.

World markets: In overseas trading, European markets rallied, with London's FTSE up 0.5%, France's CAC 40 up 1.2% and Germany's DAX up 1.2%. Asian markets fell, with Hong Kong's Hang Seng index up 1.6% and Japan's Nikkei up 2.3%.

Bonds: Treasury prices were little changed, with the yield on the 10-year note at 3.82%, unchanged from late Friday. Treasury prices and yields move in opposite directions.