Bulls find some reassurance

NEW YORK (CNNMoney.com) -- Stocks moved higher in midday trading Monday as credit market fears on Wall Street, which sparked a selloff late last week, appeared to subside.

The Dow Jones industrial average (up 34.63 to 13,216.54, Charts) was up about 83 points, or 0.6 percent, 2-1/2 hours into the session.

The broader S&P 500 (up 3.65 to 1,436.71, Charts) gained 0.7 percent while the tech-laden Nasdaq composite index (down 6.49 to 2,504.76, Charts) rose 0.2 percent.

Stocks struggled for direction at the start of Monday's session, suggesting that investors appeared to remain nervous about the state of credit markets, despite the lack of any new developments.

"The unknown always generates fear and pretty much everyone believes there are more shoes to drop," said Sid Bakst, senior portfolio manager at Robeco, Weiss, Peck & Greer.

The Dow industrials plunged over 280 points Friday on those fears, which was sparked by Wall Street bank Bear Stearns.

In a conference call Friday, Bear Stearns (down $5.21 to $103.14, Charts, Fortune 500) said it was weathering the worst financial market atmosphere in 22 years. Two days later, the company said its president and chief operating officer Warren Spector resigned Sunday amidst the firm's recent credit problems.

And with no major economic readings to be released Monday and the Federal Reserve's policy meeting on Tuesday, Wall Street investors seemed reluctant to place any significant bets.

The recent turmoil in the stock market has fueled speculation that the central bank may cut interest rates sooner than previously expected, but the central bank is widely expected to leave the Fed funds rate untouched at 5.25 percent, where it has remained since August 2006.

"I don't know that if things are any different but there's certainly the potential for disappointment if they don't say enough or do something unexpected," said Bakst.

A sharp drop in the price of oil provided some support to stocks as U.S. light crude for September delivery lost $2.33 to $73.15 a barrel. Just a week ago, oil prices reached a record trading high of $78.77.

In domestic corporate news, private equity firm Cerberus Capital Management named ex-Home Depot (up $0.20 to $36.39, Charts, Fortune 500) chief Robert Nardelli as Chrysler's chairman and chief executive officer. Nardelli left Home Depot in January under a cloud of shareholder disapproval.

Japanese firm Fast Retailing raised its offer for the department store Barney's, a division of Jones Apparel Group, to $950 million, besting a previous offer from the Dubai-based firm Istithmar. Jones (down $0.40 to $20.11, Charts, Fortune 500) shares fell nearly 2 percent in morning trade on the New York Stock Exchange.

Overseas, Dutch chemical maker Akzo Nobel (up $0.27 to $81.47, Charts) raised its bid for Britain's ICI to $16.3 billion and will get access to its rival's books.

And Belgian-Dutch financial group Fortis won shareholder approval for its $18-billion bid to buy rival ABN Amro (up $0.59 to $48.73, Charts).

European markets were mostly lower in midday trade, while Asian markets experienced a sharper selloff.

The dollar fell against the euro and yen.

Treasury prices edged lower, with the benchmark yield on the 10-year note rising to 4.70 percent from 4.69 late Friday. Bond prices and yields move in opposite directions.

COMEX gold for December fell $1 to $683.40 an ounce.