(Updates to early morning)
By Jennifer Coogan
NEW YORK, May 22 (Reuters) - U.S. stocks managed a modest
rebound on Thursday from two days of steep declines, lifted by
a proposed major acquisition in the utilities sector and an
indication of strength in the jobs market.
Financial stocks snapped back after suffering their biggest
drop in a month on Wednesday. Banks fell after the Federal
Reserve slashed its growth forecasts and hiked its estimates
for inflation, creating concern that the Fed is done cutting
interest rates.
NRG Energy Inc <NRG.N> made an unsolicited bid to buy
competitor Calpine Corp <CPN.N> for about $11 billion in stock,
the companies said late on Wednesday. For details, see
[].
Adding to Wall Street's optimism, the Labor Department
reported weekly jobless claims unexpectedly fell by 9,000 to
the lowest level in a month.
Despite the positive news, investors were still edgy over
the price of oil after it set all-time highs for a third
consecutive day on Thursday, surpassing $135 a barrel.
"It's been so encouraging that the market's done reasonably
well since mid-March when the Fed broke the log-jam in the
credit markets," said Hugh Johnson, chief investment officer of
Johnson Illington Advisors in Albany, New York.
"But it's very hard to make the case that with oil at $135
a barrel, it's not going to have a significant impact on the
U.S. economy. That has to raise lots of worries among investors
who care so much about the economy and earnings."
The Dow Jones industrial average <> was up 41.53
points, or 0.33 percent, at 12,642.72. The Standard & Poor's
500 Index <.SPX> was up 4.37 points, or 0.31 percent, at
1,395.08. The Nasdaq Composite Index <> was up 11.91
points, or 0.49 percent, at 2,460.18.
But Ford Motor Co <F.N> shares were a drag after the
automaker abandoned its profitability goal for 2009. The stock
fell 6.7 percent to $7.28 on the NYSE.
JPMorgan <JPM.N> shares rose 2.7 percent to $43.58 percent
and Citigroup <C.N> gained 2.9 percent to $21.66, making them
the top two biggest contributors to the S&P's advance.
Calpine shares rose 7 percent to $22.72. NRG stock fell 3.7
percent to $40.93.
Apparel retailers dominated the earnings agenda. AnnTaylor
Stores Corp <ANN.N> reported lower quarterly profit, hurt by
restructuring costs, sending its shares down 2.9 percent to
$25.99.
But Children's Place Retail Stores Inc <PLCE.O> fared
better, reporting higher quarterly profit on increased sales.
Children's Place shares jumped nearly 12 percent to $31.64.
Oil futures <CLc1> hit a record $135.09 overnight but were
down 21 cents at $132.96 later. [].
(Editing by Kenneth Barry)
