NEW YORK – Stocks rose Monday after three weeks of losses, helped by a slip in oil prices, a strengthening dollar and a 2.5 percent gain in insurer American International Group propped up the Dow.
The blue-chip Dow Jones industrial average (search) ended up 42.78 points, or 0.41 percent, at 10,485.65 and the broader Standard & Poor's 500 Index (search) closed up 2.86 points, or 0.24 percent, at 1,174.28. The tech-heavy Nasdaq Composite Index (search) edged up 1.46 points, or 0.07 percent, at 1,992.52.
"Investors are cautiously putting a foot back into the market," said Michael Sheldon, chief market strategist at Spencer Clarke LLC. "The market appears to be oversold, but investors are going to need some sort of catalyst, whether it's falling oil prices or earnings or some of the economic data coming out this week, to really have the confidence to push things higher."
Investors were cheered as the dollar gained ground against most major currencies, including the euro and the Japanese yen. Crude oil futures continued their slow retreat, with a barrel of light crude settling at $54.05, down 79 cents, on the New York Mercantile Exchange (search).
"Oil is a little bit weaker today, so obviously we're back to the Texas two-step, where oil falls and stocks rise," John Caldwell, chief investment strategist at McDonald Financial Group, said. "Also, we're coming off three straight weeks of declines for the major indexes, so people are starting to see some value."
American International Group (AIG) climbed $1.41 to $57.02 after brokerage Merrill Lynch said in a research note that it continued to be a buyer of AIG's stock. Merrill said the filing of the insurer's 10-K report with the Securities and Exchange Commission — expected on Thursday — could be a catalyst for the shares by helping reduce uncertainty surrounding AIG.
Federal and state authorities are investigating a reinsurance deal between AIG and a unit of Berkshire Hathaway that may have artificially boosted AIG's balance sheet.
Analysts noted that Monday's move up came on very light volume, and the advance-decline lines showed decliners slightly ahead. And while the energy sector continued to lead the market for 2005, it was the worst performer of the month so far, despite record crude oil prices.
"Take that into consideration and you're looking at a very short-term, leaderless kind of selling reprieve, more than anything else," said Brian Belski, market strategist at Piper Jaffray. "People aren't jumping up and down to get back in to this market. They're going to want to see a few days of solid upside and some real leadership from any sector, really, before they get back in."
Meanwhile, the leveraged buyout of SunGard showed that the recent wave of merger and acquisition activity would continue. SunGard, an S&P 500 constituent, rose nearly 9 percent to $34.36 after a group of private equity investment firms agreed to buy the company for about $10.8 billion plus the assumption of debt in the biggest leveraged buyout in more than 15 years.
Small U.S. tech company Immersion Corp. (IMMR ) surged 26 percent to $7.24 after Sony Corp. said it was ordered by a U.S. court to pay it $90 million in damages.
GM (GM) was downgraded to "reduce" from "neutral" by UBS due to concerns over the automaker's liquidity and questions about whether the company could continue offering dividends to its shareholders. GM slipped 93 cents to $28.37.
Pharmaceutical services company AmerisourceBergen Corp. (ABC) tumbled $7.08, or 11.6 percent, to $54.03, after it lowered its earnings forecasts for the quarter as well as the full year. The company blamed lower inventory levels maintained by its customers for the expected shortfalls.
Drug store chain Walgreen Co. (WAG) saw its sales rise 12.5 percent for its second quarter, but the company missed Wall Street's profit forecasts by a penny per share. Walgreen lost $1.12 to $45.11.
Trading was light, with 1.3 billion shares changing hands on the NYSE, below the 1.46 billion daily average for last year. About 1.5 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year.
The number of declining shares outnumbered those rising by 6-to-5 on the NYSE and by about 8-to-7 on Nasdaq.
The Russell 2000 index of smaller companies was down 0.11, or 0.02 percent, at 615.16.
Overseas, Japan's Nikkei stock average rose 0.27 percent. European markets were closed for the Easter holiday.
Reuters and the Associated Press contributed to this report.