US stocks rose on Monday as investors welcomed cash infusions into bond insurer MBIA Inc and Swiss bank UBS as votes of confidence in the battered financial sector. The likely prospect of a Federal Reserve interest-rate cut on Tuesday added to the positive mood, with shares of rate- sensitive companies like banks, mortgage lenders and home builders among the session's standouts.
MBIA Inc's shares surged 13 percent after it said buyout firm Warburg Pincus had agreed to invest $1 billion in the company, bolstering its finances amid concerns about its liquidity. The MBIA news coincided with UBS announcing a $10 billion write-down and a massive capital injection from the Singapore government and the Middle East.
"The cash infusions show the relative attractiveness of some of the financial giants such as UBS. This is a historic buying opportunity for cash-rich investors," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
The Dow Jones industrial average was up 101.45 points, or 0.74 percent, to end at 13,727.03. The Standard & Poor's 500 Index was up 11.30 points, or 0.75 percent, at 1,515.96. The Nasdaq Composite Index was up 12.79 points, or 0.47 percent, at 2,718.95. A report showing an unexpected rise in October pending existing home sales also helped to boost stocks. The Dow Jones home construction index jumped 3.3 percent.
J.P. Morgan Chase & Co was one of the top contributors to the financial sector's gains after the Investment Corporation of Dubai said it had held talks with the No 3 US bank on ways to cooperate. Since Citigroup Inc's deal to sell a 4.9 percent stake to the Abu Dhabi sovereign fund last month, analysts have speculated that there could be more investors aiming to put money in financial companies bruised by the fallout from the subprime mortgage crisis.
Shares of J.P. Morgan Chase gained 2.9 percent to $47.42 on the New York Stock Exchange, while Citigroup, the largest US bank, gained 1.3 percent to $34.77. The S&P financial index advanced 2.1 percent. MBIA shares soared 13.2 percent to $33.95.
McDonald's Corp's stock climbed to an all-time high, after the company said sales at restaurants open at least 13 months rose 8.2 percent in November. McDonald's shot up 2.9 percent to $61.90, just off the record high of $62.11 hit earlier in the session.
On the Nasdaq, Cisco Systems Inc shares were among the biggest gainers, up 0.8 percent at $27.66 after top US phone company AT&T Inc said it was buying core routers from Cisco to upgrade its Internet backbone network.
Trading was thin on the NYSE, with about 1.17 billion shares changing hands, below last year's estimated daily average of 1.84 billion. On the Nasdaq, about 1.80 billion shares traded, short of last year's daily average of 2.02 billion. Advancing stocks outnumbered declining ones by a ratio of about 2 to 1 on the NYSE and by 4 to 3 on Nasdaq.
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