(Updates to midday, changes byline)
By Kevin Plumberg
NEW YORK, April 1 (Reuters) - U.S. stocks rallied on
Tuesday, buoyed by bank stocks, which surged on strong demand
for a Lehman Brothers Holdings Inc <LEH.N> share offering and
a huge UBS writedown that signaled the worst was behind it.
Shares of Lehman jumped 11 percent on Tuesday after the
bank said it raised $4 billion of capital after an offering of
convertible preferred shares, bolstering its balance sheet and
erasing fears that it was facing the same predicament as Bear
Stearns <BSC.N>, which nearly collapsed two weeks ago.
The financial sector also benefited from news that Swiss
investment bank UBS AG <UBSN.VX> wrote down an additional $19
billion on U.S. real estate and related assets, in addition to
unveiling a massive increase in capital. U.S.-listed shares of
UBS <UBS.N> surged 12.5 percent to $32.42 on speculation that
the bank was wiping its slate clean.
"We're moving away from the credit crisis storm. It's
dying down," said David Kelly, chief market strategist with
JPMorgan Funds Management. "Now we just have whatever bad
economic weather there is. That is much safer territory for
Wall Street."
The Dow Jones industrial average <> jumped 307.93
points, or 2.51 percent, to 12,570.82. The Standard & Poor's
500 Index <.SPX> gained 33.12 points, to 2.50 percent, at
1,355.82. The Nasdaq Composite Index <> advanced 59.87
points, or 2.63 percent, to 2,338.97.
JPMorgan Chase <JPM.N>, up 6.7 percent at $45.83,
contributed the most to the Dow's advance and was the
second-biggest positive influence on the S&P 500 at midday.
Citigroup Inc <C.N>, up 9.1 percent at $23.36, and Bank of
America Corp <BAC.N>, up 5.6 percent at $40.03, rounded out
the top three stocks in the S&P.
"Financials are cheap right now, and if investors can get
comfortable that they are near or at a bottom, they can start
putting money to work in the sector." said Mark Schlarbaum, a
trader at Global Capital Management in Conshohocken,
Pennsylvania.
JPMorgan's Kelly added that the stock market's rally also
was being driven by investors' relief that liquidity issues
did not cause another Bear Stearns-style meltdown before the
quarter end.
Widespread uncertainty in stock markets around the world
led global equity and equity-related underwriting volume in
the first quarter of 2008 to fall to $100.6 billion, the
lowest level since the first quarter of 2003, according to
Thomson Financial data.
Beside the banking sector, semiconductors gave the market
more fuel for gains on Tuesday. The Philadelphia Stock
Exchange semiconductor index <.SOXX> was up 3.8 percent. Among
the best-performing shares were SanDisk Corp's <SNDK.O> stock,
up nearly 10 percent at $24.75 on the Nasdaq.
