Countrywide deal buoys Wall Street

By MADLEN READ, Associated Press

Posted Friday, January 11, 2008
NEW YORK -- A volatile Wall Street advanced Thursday for the second day in a row as investors found renewed confidence in a report that Bank of America Corp. is close to buying struggling mortgage lender Countrywide Financial Corp.

After seesawing earlier in the day, the Dow Jones industrials finished up nearly 120 points on the afternoon report from The Wall Street Journal. The stock market has been buffeted by worries about fallout from the mortgage and credit crisis. Countrywide's problems with delinquent and defaulting loans have sent stocks falling even in recent days.

"For the last month, rumors are that Countrywide was going into bankruptcy," said Ryan Larson, senior trader at Voyageur Asset Management. "Any deal with Bank of America is good news, and the market is looking for even a hint of good news these days."

Credit troubles were one reason the market waffled in earlier trading, with investors trying to reconcile comments on the economy from Federal Reserve Chairman Ben Bernanke and Kansas City Fed President Thomas Hoenig.

Stocks jumped after Bernanke said the Fed was ready to lower interest rates again to ward off a recession: "We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks."

But they bobbled up and down before turning narrowly mixed after Hoenig said later that inflation remains a problem and the stock market is "not the center of our attention." The comments kept alive fears that the Fed may not respond to investors' fears even as it monitors the weakening economy.

The Dow Jones industrial average rose 117.78, or 0.92 percent, to 12,853.09. The Standard & Poor's 500 index rose 11.20, or 0.79 percent, to 1,420.33, while the Nasdaq composite index rose 13.97, or 0.56 percent, to 2,488.52.