The Dow and the S&P 500 rose on Monday, helped by a pullback in oil prices, while a report of an increase in home sales helped offset the impact of a big loss forecast by Lehman Brothers Holdings Inc. Higher sales last month at McDonald's Corp also helped Wall Street's mood, sending shares of the world's largest restaurant chain up almost 4 percent.
While the Dow and the S&P bounced back from Friday's sharp drop, the Nasdaq composite index fell. Apple Inc was down before unveiling its newest iPhone. Shares of the maker of the iPod and Macintosh computers were down 1.8 percent at $182.39 on Nasdaq. An announcement was expected at 1700 GMT. Lehman Brothers, the fourth-largest US investment bank, forecast a $2.8 billion second-quarter loss and unveiled a plan to raise $6 billion to strengthen its capital.
Pending sales of previously owned homes unexpectedly rose in April to the highest in six months as foreclosed properties flooded the market and drove prices sharply lower, the National Association of Realtors said. "I think the market is basically having second thoughts about the horrible day we had on Friday," said Brian Gendreau, investment strategist at ING Investment Management-Americas in New York.
He said the sharp rise of about $16 in the price of crude oil over Thursday and Friday was "way outside the realm of experience." But he said there are concerns that if gasoline stays near $4.00 per gallon, it offsets a big portion of the government's economic stimulus program.
The Dow Jones industrial average rose 96.81 points, or 0.79 percent, to 12,306.62. The Standard & Poor's 500 Index gained 5.98 points, or 0.44 percent, to 1,366.66. The Nasdaq Composite Index fell 14.56 points, or 0.59 percent, to 2,460.00.
Major market indexes fell about 3 percent on Friday as the price of oil soared and the government reported that May's jobless rate jumped by the biggest amount in 22 years.
Lehman, whose stability was questioned after the global credit crisis led to the collapse of Bear Stearns Cos., blamed its troubles on trading and hedging losses. Lehman's shares fell 9.3 percent to $29.30 on the New York Stock Exchange.
US crude for July delivery fell $1.74, or 1.3 percent, to $136.80 per barrel after settling at a record $138.54 on the New York Mercantile Exchange on Friday. McDonald's shares gained 3.9 percent, or $2.19, to $59.14 after the hamburger chain said sales jumped 7.7 percent at stores open at least 13 months.