Insurers, Builders Help Stocks

A rally in financial and housing stocks helped the market stabilize Wednesday after a two-day drubbing.

At 11:05 a.m., the Dow Jones Industrial Average, which fell almost 230 points over the previous two sessions, was higher by about 24 points. The S&P 500 was flat amid gains in its technology and consumer-discretionary sectors and losses in energy stocks.

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A Wall Street Journal report that the Treasury Department will make federal bailout money available for some struggling life-insurance companies helped rally those stocks. Hartford Financial Services Group, Genworth Financial and Lincoln National surged.

In deal news, Pulte Homes and Centex said they will combine in a $1.3 billion stock-for-stock deal that would create the nation's largest home builder. Pulte shares declined 7.8%, while Centex surged 23.7%. Other builders also bounced on the news. Lennar shares rose 7%.

Earnings news was mixed Wednesday. Alcoa rose 0.6% after reporting a $497 million first-quarter loss Tuesday, but transportation company Ryder System declined about 17.6% after it warned that its first-quarter earnings will be much leaner than expected. Transportation and materials had been among the sectors leading the market's recent month-long jump from its bear-market lows.

Associated Press

Traders work on the floor of the New York Stock Exchange April 8.

Family Dollar Stores said that its fiscal second-quarter earnings surged 33% amid strong sales of food, cleaning supplies and other staples. The company boosted its outlook. Its shares were higher by about 4%, and consumer and retail shares in general were stronger in morning trading. Home Depot was up 2% among the stronger stocks of the Dow.

Market veterans expect the just-underway first-quarter earnings season to exert increasing influence on major indexes in the weeks ahead.

"We have folks right now trying to rationalize how far the market has already come in the face of these profits that no one expects to be very good," said Art Hogan, chief market analyst at Jefferies & Co., referring to the market's strong rally from bear-market lows over the past month.

He added: "The real catalyst that will get the market moving here is the answer to how adequately we priced in the bad news when we were at the lows. We're about to get that answer."

Other market yardsticks headed higher Wednesday. The technology-oriented Nasdaq Composite Index was up about 0.8%. The small-stock Russell 2000 gained 0.9%.

Oil prices recovered from an early drop after new data showed a smaller-than-expected rise in U.S. inventories of the commodity. Crude futures were recently up about 60 cents, trading just below $50 a barrel in New York.

Minutes from the last Federal Reserve interest-rate setting meeting will be released in the afternoon, giving the market more information on the decision to buy $300 billion of government bonds. Treasury prices were slightly higher.