Midday Market Update: Financials Rally on Higher Bear Stearns Bid

March 24, 2008

By Jennifer Yousfi, Contributing Writer, Money Morning

By Jennifer Yousfi
Managing Editor

Stocks rallied in morning trading on news that JPMorgan Chase & Co. (JPM) had increased its bailout bid for The Bear Stearns Cos. Inc. (BSC).

At noon ET, the blue-chip Dow Jones Industrial Average Index had posted a gain of 222.25 points (1.80%), to trade at 12,583.57. The tech-laden Nasdaq Composite Index jumped 63.34 points (2.80%), to reach 2,321.45. And the broader Standard & Poor's 500 Index had increased 24.03 points (1.81%), to hit 1,353.54.

Most sectors were up with the basic materials sector (3.18%), and the consumer cyclical sector (3.38%) posting the largest gains. The utilities sector was the only loser, shedding a scant decline of 0.06%.

The financial sector posted a 2.55% gain as Bear Stearns shares shot up over 100% on news that JPMorgan had quadrupled its original bid in an effort to woo angry shareholders.

A surprise increase in home sales and a strong fourth-quarter earnings report from Tiffany & Co. (TIF) also helped to boost stocks.

"If you have stabilization of financial stocks, if we don't see any more near-bankruptcies, we can have a rally," Tom Wirth, senior investment officer at Chemung Canal Trust Co. in Elmira, New York, which manages $1.8 billion, told Bloomberg News. "Tiffany is bringing back to focus that the economy still is not that bad off."

In overseas markets, Japan's Nikkei Index shed 2.48 to close at 12,480.09 on Monday. Hong Kong's blue-chip Hang Seng Index plunged with a decrease of 758.72 points to close at 21,108.22 on Thursday, before closing for the four-day Easter weekend.

In Europe, the Paris-based CAC40, London's FTSE 100, Madrid's IBEX 35 and the Frankfurt-based DAX all posted declines before closing Thursday. Europe's exchanges will reopen tomorrow (Tuesday).

At midday, the dollar had gained ground against the euro [up 0.436%], the yen [up 1.697%] and the pound sterling [up 0.071%].

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