Stocks jump on Lehman, oil
08/22/2008 Wall Street starts the day on the right foot as investors welcome signs that the brokerage could be bought out. Weaker crude prices and a stronger dollar help too.
NEW YORK -- Stocks rallied Friday morning as investors eyed falling oil prices, a stronger dollar and growing speculation that troubled Lehman Brothers could be a takeover candidate.The Dow Jones industrial average (INDU), the broader Standard & Poor's 500 (SPX) index and the Nasdaq composite (COMP) all surged in the early going.Stocks were mixed Thursday, as a nearly $6 spike in oil prices lifted energy stocks, but dragged on many other areas of the market.Oil prices retreated Friday morning as the dollar strengthened. Those developments, in conjunction with some optimism about the financial sector, gave Wall Street a lift.Investors were also attuned to a 10:00 a.m. ET speech from Federal Reserve Chairman Ben Bernanke at the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming.Bernanke reiterated that ongoing problems in the financial sector are dragging on the economy.Fuel prices: U.S. light crude oil for October delivery fell $1.72 to $119.46 a barrel on the New York Mercantile Exchange, as the dollar rallied versus the yen and euro. A stronger dollar makes dollar-traded commodities like oil more expensive for international investors.On Thursday, crude jumped $5.62 a barrel, its second-biggest one-day jump ever, on the weaker dollar, tensions in Russia and concerns about a U.S. recession.Retail gas prices dropped overnight, extending the downward trend for a 36th day, according to a survey of gas station credit-card activity. (Full story.)Financials: Lehman (LEH, Fortune 500) shares rallied 13% on reports that Korea Development Bank may be considering buying the embattled brokerage. The stock has been hard hit on concerns about its financial solvency with many brokerages cutting third-quarter and full-year forecasts on the company.Lehman has been looking for a buyer for at least part of its investment management business, but talks with Chinese and Korean investors had reportedly broken down earlier in the week.Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) shares inched higher after plunging earlier in the week on fears that a government takeover is imminent.Other markets: In the bond market, Treasury prices fell, raising the yield on the benchmark 10-year note to 3.87% from 3.83% late Wednesday. Prices and yields move in the opposite direction.COMEX gold for October delivery fell $8.40 to $826.60 an ounce
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