US STOCKS-Market ends higher on Lehman's rally, lower oil
Index Value: 11,628.06
Trade Time: 4:08PM ET
Change: 197.85 (1.73%)
Prev Close: 11,430.21
Open: 11,426.79
Trade Time: 4:08PM ET
Change: 197.85 (1.73%)
Prev Close: 11,430.21
Open: 11,426.79
* Hopes for an investment in Lehman boost financials
* Buffett says stocks more attractive now than a year ago
* Bernanke encouraged by drop in commodity prices
* Dow up 1.7 pct, S&P 500 up 1.1 pct, Nasdaq up 1.4 pct (Updates to close)
By Steven C. Johnson
NEW YORK, Aug 22 (Reuters) - U.S. stocks rallied on Friday to score their best daily gain in two weeks as hopes that Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) may attract a major investor lifted financial stocks while a plunge in oil prices soothed worries about inflation and consumer spending.
The rally helped the broader market erase most of the losses suffered in recent days, leaving the Dow and the S&P 500 only a touch below where they were when the week began.
Shares of Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz) ended up 5 percent after the Korea Development Bank [KDB.UL] said the U.S. brokerage was a possible acquisition target.For details, see [ID:nSEO332057]. At one point, Lehman's stock was up more than 15 percent.
Lehman is among the U.S. banks whose business has been battered by mounting losses sparked by the U.S. housing slump. Lehman's stock has lost nearly 80 percent of its value this year and the investment bank has taken $7 billion in write-downs. Earlier this week, several brokerages forecast more write-downs to come. Continued...
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Oil falls 5.4 percent in biggest drop since 2004
Crude oil prices fell more than 5.4 percent on Friday in the biggest one-day slide since 2004 as dealers turned their focus to rising supply levels and weakening global demand.
A rebound in the U.S. dollar encouraged the sell-off, applying downward pressure across the commodities markets by weakening the purchasing power of buyers using other currencies, dealers said.
The slide adds to a more than 20 percent fall in the price of crude since mid-July and could increase the chance oil cartel OPEC will cut official production limits when the group meets in Vienna on September 9.
U.S. crude fell $6.59, or 5.4 percent, to settle at $114.59 a barrel -- the biggest fall in percentage terms since December 27, 2004. London Brent crude fell $6.24 to $113.92 a barrel.
"People who were buying yesterday are taking profits today," said Peter Beutel, analyst at consultancy Cameron Hanover. "There is also renewed technical selling and talk again of demand destruction. The dollar is strong again too."
The declines Friday were encouraged by two reports -- one showing an uptick in OPEC crude oil output and another showing an expected decline in U.S. travel over the September 1 Labor Day holiday weekend as high fuel prices hit consumers.
Industry consultant Petrologistics said on Friday OPEC oil output was expected to rise in August by 450,000 barrels per day, to 32.95 million bpd, a factor that could further beef up inventory levels in consumer nations.
Meanwhile, the U.S. auto and travel group AAA said that Labor Day holiday travel was expected to fall this year by the largest amount in at least eight years as consumers struggle with higher gasoline prices and airfares. Continued...
Source: Reuters.com.