Wall St. finds the higher ground

Stocks advance after struggling for direction earlier in the session; investors eye credit markets, earnings.

By David Ellis, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Stocks moved modestly higher Monday afternoon, finally finding some momentum, as credit markets and corporate earnings remained in focus.

The Dow Jones industrial average (up 46.26 to 13,311.73, Charts) gained 0.3 percent with 2-1/2 hours remaining in the session, after seesawing the breakeven point in early trade.


The broader S&P 500 (up 6.15 to 1,465.10, Charts) climbed nearly 0.4 percent while Nasdaq composite index (up 8.92 to 2,571.16, Charts) rose 0.3 percent.

"What we are seeing is a market that is trying to stabilize," said Peter Cardillo, chief market economist at Avalon Partners, noting the lack of any significant economic readings due out Monday.

"[The market] is slipping into the plus and minus column - that is a good sign that the worst is probably over."

Stocks struggled at the start of Monday, in a session with no major economic reports, as investors attempted weighed the latest corporate earnings and troubling credit market news from American Home Mortgage Investment (up $0.00 to $10.47, Charts).

The mortgage lender announced late Friday that its banks are demanding it put up more cash after wrote down the value of its loan and security portfolios significantly.

Those credit market fears sent global stock markets tumbling last week, with the 30-stock Dow industrials falling 585 points, posting its biggest percentage drop since March 2003.

Investors around the world have been rattled by signs of tougher conditions in credit markets, since tighter credit could raise the cost of borrowing for companies, hurting corporate earnings. This is likely to slow the buyout boom, which has helped prop up stock prices.

But the deal-making hasn't completely dried up, as the diversified manufacturer Ingersoll-Rand (up $2.48 to $50.62, Charts) said it would sell its Bobcat unit to South Korean firm Doosan Infracore for $4.9 billion in cash.

On the earnings front, Dow component Verizon Communications (down $0.57 to $41.43, Charts, Fortune 500) reported improved earnings that met forecasts. And Verizon's wireless division, a joint venture with Vodafone Group (down $0.29 to $30.35, Charts), also announced it would purchase Rural Cellular (up $10.78 to $42.59, Charts) for $757 million, sending shares of the smaller carrier nearly 34 percent higher on the Nasdaq.

RadioShack (down $3.52 to $25.28, Charts, Fortune 500) booked better-than expected profit, helped by cost cutting. But sales for the most recent quarter tumbled more than expected, worrying investors and sending shares of the company nearly 12 percent lower in afternoon trade on the New York Stock Exchange.

Shares of Dow Jones (down $2.18 to $52.52, Charts) fell nearly 4 percent Monday afternoon after a spokesperson for News Corp. (up $0.07 to $22.73, Charts, Fortune 500) said the company may no longer proceed with its $5 billion bid for the Wall Street Journal publisher it if does not receive more support from the Bancroft family, which holds a controlling stake in the company.

Dutch bank ABN Amro (up $0.89 to $48.20, Charts) adopted a neutral position on two rival takeover offers it has received after withdrawing support for a bid from British bank Barclays (up $0.65 to $55.58, Charts).

Treasury prices edged lower, lifting the yield on the 10-year note to 4.77 percent from the 4.76 percent level reached after bonds rallied Friday in reaction to the selloff in equities.

The dollar was lower against the euro and the yen.

Oil prices solidified above $77 a barrel; U.S. light crude for September rose 13 cents at $77.15 a barrel on the New York Mercantile Exchange.

COMEX gold for December gained $3.80 to $676.10 an ounce.

Market breadth was mixed. Winners beat losers by nearly 6 to 5 on the New York Stock Exchange on volume of 1.16 billion shares. Decliners edged out advancers on volume of 1.36 billion shares

In overseas markets, as Asian markets ended the session modestly higher. European stocks finished lower. Top of page