Bulls strike back

NEW YORK (CNNMoney.com) -- Investors waded back into the market Monday, with the Dow industrials climbing more than 100 points, as credit markets fears appeared to subside on Wall Street.

The Dow Jones industrial average (up 111.53 to 13,377.00, Charts) gained by as much as 126 points and was 0.8 percent higher with less than an hour remaining in the session, after seesawing the breakeven point in early trade.

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The broader S&P 500 (up 16.16 to 1,475.11, Charts) surged over 1.2 percent while Nasdaq composite index (up 26.12 to 2,588.36, Charts) climbed 1.1 percent.

"A number of brokerage firms or economic strategists have reached the conclusion that the problems in the credit market do not imply that the economy and earnings are going to go into a tailspin ," said Hugh Johnson, chief strategist for ThomasLloyd Global Asset Management.

Stocks struggled at the start of Monday, in a session with no major economic reports, as investors 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 writing down the value its loan and security portfolios significantly.

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 have worried that tougher conditions in credit markets could raise the cost of borrowing for companies, hurting corporate earnings and slow the buyout boom, which has helped prop up stock prices.

While investors did not see the type of activity of past "merger Mondays," there were a handful of deals including an announcement by Ingersoll-Rand (up $3.89 to $52.03, Charts) to sell its Bobcat unit to South Korean firm Doosan Infracore for $4.9 billion.

The wireless division of Dow component Verizon Communications (down $0.61 to $41.39, Charts, Fortune 500), a joint venture with Vodafone Group (down $0.24 to $30.40, Charts), also announced it would purchase Rural Cellular (up $10.86 to $42.67, Charts) for $757 million, sending shares of the smaller carrier nearly 34 percent higher on the Nasdaq. On a related note, Verizon reported improved earnings that met forecasts.

And RadioShack (down $3.43 to $25.37, 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 $2.14 to $52.31, Charts) fell over 4 percent Monday afternoon after a spokesperson for News Corp. (up $0.14 to $22.80, 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 $1.19 to $48.50, Charts) adopted a neutral position on two rival takeover offers it has received after withdrawing support for a bid from British bank Barclays (up $0.90 to $55.83, Charts).

The Amex Gold Bugs index rose 2.6 percent, while the Amex Oil index added 1.4 percent, and the Amex Natural Gas index climbed 1.5 percent.

The Chicago Board Options Exchange's Volatility Index, or VIX (down $3.00 to $21.17, Charts), an indicator of market volatility that traders follow, fell nearly 12 percent Monday after closing at its highest level in more than four years on Friday. The VIX and the market tend to move in opposite directions.

Treasury prices fell, lifting the yield on the 10-year note to 4.79 percent from the 4.77 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 eased after climbing above $77 a barrel; U.S. light crude for September fell 20 cents at $76.82 a barrel on the New York Mercantile Exchange.

COMEX gold for December gained $4.30 to $676.60 an ounce.

Market breadth was positive. Winners beat losers by nearly 2 to 1 on the New York Stock Exchange on volume of 1.57 billion shares. Decliners topped advancers by more than 3 to 2 on volume of 1.83 billion shares