Stocks make it 2 for 2
JP Morgan's improved offer for Bear Stearns lifts financial stocks and the broader market, with Wall Street advancing for second session in a row.
NEW YORK (CNNMoney.com) -- Stocks gained Monday afternoon after news that JP Morgan Chase is boosting its bid for Bear Stearns reassured investors, helping to extend the recent rally.
The Dow Jones industrial average (INDU) jumped almost 190 points, or 1.5%. The broader Standard & Poor's 500 (SPX) index jumped 1.5%, and the Nasdaq composite (COMP) soared 3%.
JP Morgan Chase (JPM, Fortune 500) quintupled its initial offer for Bear Stearns (BSC, Fortune 500) to $10 a share. JP Morgan will also purchase 95 million newly issued shares immediately, giving the company a 39.5% stake in Bear before shareholders vote on the new deal. (Full story).
Bear Stearns shares surged 89%, while JP Morgan Chase shares rose 1.3%. A variety of other big financial stocks rose, including Merrill Lynch (MER, Fortune 500), AIG (AIG, Fortune 500), Goldman Sachs (GS, Fortune 500) and Citigroup (C, Fortune 500).
Bear Stearns news is helping the market in that "it provides those who think the financial crisis is approaching a bottom with some evidence," said Ron Kiddoo, chief investment officer at Cozad Asset Management.
He said that the reality is that there is probably more bad news on the way from other big financial firms which could mean some more stock weakness. However, stock investors are beginning to fell a bit less wary overall, particularly with all the recent government assistance.
Last week the Federal Reserve cut interest rates for the sixth time in a row since September, and announced it was pumping billions more into the banking system as a means of loosening up the credit markets.
That sent stocks higher, with markets jumping on Thursday, before closing for Good Friday.
Mortgage stocks rose after the government said the Federal Home Loan Bank system can boost their purchases of Fannie Mae and Freddie Mac mortgage-backed securities by $100 billion over two years. The move is the latest in an effort to thaw the frozen credit market amid the housing market collapse.
In other news: the Department of Justice has approved the XM Satellite-Sirius merger, over a year after it was first announced. XM (XMSR) shares jumped 15.5%, while Sirius (SIRI) shares gained 8.6%. (Full story).
Stocks are also benefiting right now from end-of-quarter moves, said Mark Travis, president at Intrepid Capital Funds.
"You have a lot of people pushing into the close of the month, trying to get the quarter to look better," said Travis. "At one point, you had the S&P 500 down more than 12% just in the quarter, so people want to end it on a better note."
Economic news. Investors also eyed a report showing that existing home sales rose in February from the previous month, topping forecasts. However, February sales were also lower versus a year ago and home prices posted the biggest year-over-year drop in history. (Full story).
Company news. Walgreen (WAG, Fortune 500), the drugstore chain, reported higher quarterly earnings that topped estimates. Shares rallied 5%.
Tiffany & Co. (TIF) reported lower quarterly earnings, due to a bad loan, but results topped estimates. The luxury jeweler also expects 2008 earnings to exceed analysts' current expectations. Shares jumped 10.5%.
Gains were broad based, with 27 out of 30 Dow issues rising, including Home Depot (HD, Fortune 500), Caterpillar (CAT, Fortune 500) and Exxon Mobil (XOM, Fortune 500).
Cisco (CSCO, Fortune 500), Apple (AAPL, Fortune 500), Oracle (ORCL, Fortune 500) and Dell (DELL, Fortune 500) were among the tech stocks rising.
Market breadth was positive. On the New York Stock Exchange, winners topped losers by more than 4 to 1 on volume of nearly 1.57 billion shares. On the Nasdaq, advancers beat decliners 7 to 3 on volume of 2.32 billion shares.
Commodity prices. Oil and gold prices fluctuated after sliding in the early going.
U.S. light, crude oil for May delivery fell 98 cents to settle at $100.86 a barrel on the New York Mercantile Exchange. Oil prices hit a record $111.80 in electronic trading last week.
COMEX gold for April delivery fell $1.30 to settle at $918.70 an ounce. Gold hit an all-time trading high of $1,033.90 an ounce one week ago.
Other markets. The dollar gained versus both the euro and yen. Since hitting an all-time low versus the euro and a 12-year low versus the yen last week, the dollar has recovered a bit.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.55% from 3.36% late Thursday. Bond prices and yields move in opposite directions. 
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