NEW YORK – U.S. stocks jumped Tuesday, led by gains in the Dow industrials as talk that aluminum maker Alcoa Inc. (AA) may be a takeover target bolstered optimism about deals and energy shares gained with a sharp rebound in oil prices.
The Dow Jones industrial average climbed 102.30 points, or 0.81 percent, to end at 12,654.85. The Standard & Poor's 500 Index shot up 10.89 points, or 0.76 percent, to finish at 1,444.26. The Nasdaq Composite Index rose 9.50 points, or 0.39 percent, to close at 2,459.88.
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The blue-chip Dow average shot up more than 100 points, while the Standard & Poor's 500 index achieved its biggest daily percentage gain since Jan. 24. These advances — and a higher finish for the Nasdaq — followed three consecutive sessions of losses that were triggered by last week's revelations of rising defaults on home loans to Americans with shaky credit.
Right after the opening bell, Wall Street got a jolt of excitement when the Nasdaq showed a surge of more than 3,000 points to a level that recalled the heady days of March 2000 just before the Internet stock bubble burst. But a Nasdaq Stock Market Inc. spokesman said the spike was due to erroneous trades involving shares of Optimer Pharmaceuticals Inc.
The Times of London said multinational miners BHP Billiton and Rio Tinto Ltd. have drawn up separate plans for a $40 billion acquisition of Alcoa. But a source close to the matter said BHP Billiton was not working on a bid.
"The market was poised for some type of a pullback rally. The Alcoa situation, although it hasn't been confirmed yet, probably aided it," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore. "But it was traders and investors taking advantage of some weakening over the last few sessions."
U.S. crude oil futures prices rose more than $1 a barrel , helped by an International Energy Agency report raising its forecast for growth in 2007 world oil demand. The gains followed a drop in crude oil futures prices of more than $2 on Monday. Shares of Exxon Mobil Corp. (XOM) were among the top positive influences on both the S&P 500 and Dow.
Crude for March delivery rose 2.2 percent, or $1.25, to settle at $59.06.
Exxon's stock gained 1.1 percent, or 85 cents, to $75.45 on the New York Stock Exchange.
On the Nasdaq, Applebee's International Inc. (APPB) shot up 8.6 percent, or $2.09, to $26.32 after the restaurant chain said it is exploring strategic alternatives, including the possible sale of the company. Earlier in the session, Applebee's stock climbed as high as $27.32, its highest price since June 2005.
Shares of mortgage bankers, home builders and real estate investment trusts rebounded after three days of losses. Worries about rising mortgage defaults had pushed the shares down. The MSCI U.S. REIT Index rose 1.8 percent.
"You saw a dramatic turnaround in REITs after being pummeled over the last few days," Mata said. "People are afraid that they're missing the bottom."
Adding to the positive tone, Merrill Lynch lifted its rating on shares of General Motors Corp. (GM) and diversified manufacturer 3M Co. (MMM) announced a $7 billion share buyback.
Alcoa shares climbed 6.4 percent, or $2.10, to $35 and recorded their biggest percentage gain since November 2002. 3M shares jumped 2.5 percent, or $1.84, to $76.43. GM's stock rose 2.5 percent, or 88 cents, to $36.59.
Shares of Nasdaq, the U.S. exchange operator, fell 11.4 percent, or $4, to $31.10 after it issued a disappointing 2007 earnings forecast.
Trading was moderate on the NYSE, where about 1.46 billion shares changed hands, below last year's estimated average daily volume of 1.84 billion. On the Nasdaq, about 1.88 billion shares traded, below last year's average daily volume of 2.02 billion.
Advancers outnumbered decliners on the Big Board by a ratio of 8 to 3, while on Nasdaq, three stocks rose for every two that fell.
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