- The Washington Times - Friday, April 25, 2008

NEW YORK (Bloomberg) — Stocks gained for a second day on renewed speculation that the worst is over for financial and consumer shares after Merrill Lynch assuaged concern about its finances, the dollar rallied and oil prices fell.

Shares of Merrill, the largest brokerage, climbed the most in three weeks after saying it has enough capital to maintain its dividend. Target and Macy’s rose as the dollar rebounded against the euro and oil posted its biggest drop of the month.

Dividend cuts “have been a cloud over the marketplace, and that was definitely alleviated today with Merrill,” said Michael Mullaney, a money manager at Fiduciary Trust. “Lower oil prices would be very much welcome.”

The Standard & Poor’s 500 Index increased 8.89 points, or 0.6 percent, to 1,388.82. The Dow Jones Industrial Average added 85.73, or 0.7 percent, to 12,848.95. The Nasdaq Composite Index rose 23.71, or 1 percent, to 2,428.92, helped by a 3.7 percent advance in Apple after analysts boosted share-price estimates.

The Russell 2000 Index of smaller companies gained 1.3 percent to 717.07. Almost two stocks gained for each that fell on the New York Stock Exchange.

Merrill shares rallied $3.18 to $48.09 after saying it will maintain its dividend at 35 cents. Chief Executive John Thain said he has no plans to separate the firm’s brokerage from its investment bank or sell its 49.8 percent stake in money manager BlackRock. Mr. Thain also said he has no intent to sell Merrill’s passive 20 percent stake in Bloomberg LP, the parent of Bloomberg News.

Shares of Citigroup Inc., which cut its dividend by 41 percent in January, jumped $1.13 to $25.76. The stock is trading 4.4 percent below its closing level on Jan. 15, when Citigroup announced the dividend cut.

The S&P; 500 Financials Index has tumbled 28 percent since the beginning of this year as global banks and brokers reported at least $290 billion of credit losses and asset write-downs stemming from the subprime mortgage market’s collapse.

Still, the gauge has rallied 14 percent from an almost five-year low on March 17, buoyed by $212 billion of fresh capital and new lending facilities from the Federal Reserve.

Target shares added 52 cents to $52.90. Macy’s shares climbed $1.16 to $24.36.

Apple shares gained $6.05 to $168.94. Analysts at four firms boosted their price estimate for the shares. Apple reported surging sales and profit for its fiscal second quarter, led by higher-than-anticipated demand for Macintosh computers. The company still forecast earnings for the current quarter that missed analysts’ estimates.

Ambac Financial shares climbed 30 cents to $3.76. The bond insurer, which is struggling to hold on to its AAA credit rating, has no liquidity issues, and the majority of its portfolio is performing well, interim Chief Executive Michael Callen said.

Shares of MBIA Inc., the biggest bond insurer, rallied $1.01 to $9.80.

Ryland Group, the home builder that targets first-time buyers in 15 states, sparked a rally in construction companies after reporting a first-quarter loss that was narrower than projections. Ryland shares gained $2.12 to $34.46. D.R. Horton Inc. shares advanced 84 cents to $16.73.


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