Stocks Rise on Lehman Buyout Hopes

Meanwhile, General Motors (GM Quote) is preparing to initiate discussions leading to a potential sale of its Hummer brand. Hummer sales have been suffering as rising fuel costs have left consumers choosing more fuel-efficient alternatives.

In the pharmaceutical arena, Abbott Labs (ABT Quote) said it would be eliminating 1,000 jobs to increase efficiencies in its diagnostic business.

The Journal also reported that telecom firm Verizon (VZ Quote) and Internet search provider Google (GOOG Quote) are forming a pact to have Google provide search services on Verizon devices and share in advertising revenue.

In earnings news, bulk shipper DryShips (DRYS Quote) announced a rising second-quarter profit thanks to the sale of three of its boats. Adjusting for those one-time gains, profits came in higher than last year but fell short of analyst estimates.

Specialty clothiers Ann Taylor (ANN Quote) and Perry Ellis (PERY Quote) also reported quarterly results. Ann Taylor showed a profit that declined year over year but beat analyst estimates. Perry Ellis, meanwhile, swung to a loss and lowered its 2009 earnings forecast.

Overseas, European stocks were enjoying gains, while Asia was more subdued. The FTSE in London and Frankfurt's Dax were both up, while Japan's Nikkei and the Hang Seng in Hong Kong were lower.