U.S. Stocks Open in Bull Mode

Wall Street opens to the upside on news the U.S. Treasury may take equity positions in U.S. banks, and encouraging earnings from IBM.
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Publish date:

Updated from 6:51 a.m. EDT

Stocks in New York opened higher Thursday, following a report that the

Treasury

may take equity positions in U.S. banks. An encouraging earnings report from tech bellwether

IBM

(IBM) - Get Report

also was bolstering sentiment.

The

Dow Jones Industrial Average

was gaining 127 points to 9385. It was one year ago today that the Dow closed at an all-time record high of 14,164. The

S&P 500

was up 12 points to 997. The

Nasdaq

was better by 31 points at 1771.

On Wednesday, stocks traded chaotically before closing with losses after the

Federal Reserve

and central banks from other countries issued a coordinated cut in interest rates to alleviate the credit crunch.

Ahead of the new day's trading,

The New York Times

reported that the

Treasury

may take ownership positions in U.S. banks to improve confidence in the financial system. The U.K. has pursued a similar plan by taking partial national ownership in

Royal Bank of Scotland

(RBS) - Get Report

and

Barclays

(BCS) - Get Report

.

Bloomberg

reported that

BlackRock

(BLK) - Get Report

and

Pimco

, a unit of

Allianz

(AZ)

, had both proposed to

manage mortgage-backed securities

to be bought by the Treasury as part of its $700 billion financial-sector rescue plan.

Separately, the Fed said it would grant insurance company

AIG

(AIG) - Get Report

up to $37.8 billion in exchange for fixed-income securities. The cash infusion comes on top of the $85 billion already lent out in September to keep the company from going bankrupt.

Among other insurers,

MetLife

(MET) - Get Report

has recently discussed a potential merger with

Hartford Financial

(HIG) - Get Report

, according to a report in

The Wall Street Journal

. The report said the discussions didn't lead to a deal, but that they indicate the strain the credit crunch has exacted from insurance firms.

Elsewhere, the

Journal

reported that

National City

(NCC)

was in discussions with other banks, perhaps

PNC Bank

(PNC) - Get Report

or

Bank of Nova Scotia

(BNS) - Get Report

about potentially selling itself.

Financial stocks are again likely to hold the spotlight today as a three-week ban on short-selling of stocks in the sector lifted just before midnight. The

Securities and Exchange Commission

had implemented the rule on Sept. 19 as an emergency measure to help stem massive selling in bank stocks.

Looking at corporate earnings Dow component

IBM preannounced

its third-quarter results, saying it made a profit that increased year over year and topped analyst estimates.

As for economic data, initial jobless claims for the week ended Oct. 4 came in at 478,000, down from 498,000 the previous week but slightly above economists' estimates for 475,000 jobs lost.

In commodities, crude oil recently was up 8 cents at $89.03 a barrel. Gold was declining $17.40 to $889.10 an ounce.

Longer-dated U.S. Treasury securities were declining. The 10-year note was down 32/32 to yield 3.76%, and the 30-year was down 2/32, yielding 4.05%. The dollar was higher vs. the yen and tracking lower against the euro and pound.

Overseas, European indices, such as the FTSE in London and the DAX in Frankfurt, were mostly higher. Asia was mixed, as the Nikkei in Japan closed on the downside while the Hang Seng in Hong Kong finished with gains.