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Stocks end mixed, investors bet on financials

The stock market pulled off its lows Monday after investors set aside some of their concerns about the government's case against Goldman Sachs. Major indexes ended mixed.
/ Source: The Associated Press

Investors snapped up financial stocks Monday after concerns eased about the government's case against Goldman Sachs.

The Dow Jones industrial average ended with a gain of 73 points Monday after sliding for much of the day. The advance followed a drop of 126 points Friday after the Securities and Exchange Commission filed civil fraud charges against Goldman Sachs related to mortgage investments.

The Standard & Poor's index also rose, while the Nasdaq composite index fell.

Analysts said reports that the SEC voted 3-2 along party lines to press its case against Goldman Sachs eased some of investors' worries. Investors seemed placated by the fact the vote wasn't unanimous. A rebound in Goldman shares helped lift financial shares.

Investors have been concerned about potential repercussions tied to the charges against Goldman. The SEC said the company didn't inform clients about conflicts of interest in mortgage investments it sold. Goldman has said it would fight the charges. The suit comes just as Congress is taking up a bill to overhaul regulation of the financial industry.

"Is financial reform going to be a big setback for financial company earnings?" said Colleen Supran, a portfolio manager at Bingham, Osborn & Scarborough in San Francisco. "And what is that going to mean for overall earnings for, say, the S&P, which is what we really care about."

Meanwhile, airline stocks fell after most European airports remained closed for a fifth day following the spread of ash from a volcano in Iceland. Analysts estimated that airline losses topped $1 billion. American Airlines parent AMR Corp. fell 4.3 percent, while United parent UAL Corp. lost 5.1 percent.

The technology-dominated Nasdaq composite index lagged ahead of a report from International Business Machines Corp. The company said after the closing bell that its first-quarter profit rose in part because of higher revenue. The stock slipped in electronic trading.

The market drew some support from a steep increase in the Conference Board's index of leading economic indicators. The report signals that economic activity will strengthen in the next three to six months. The Conference Board's leading indicators index rose to 1.4 percent for March. Economists had predicted growth of 0.9 percent.

"It's just giving you more indication that the road to recovery is not as tenuous as you might have thought," said Brett Hryb, portfolio manager with MFC Global Investment Management in Toronto, referring to the leading indicators report.

The stock market has been generally rising for about 13 months on expectations that the economy would begin improving, and over the past two months they have been on a nearly unbroken climb. Analysts said the bounce off the lows Monday signaled that there are enough buyers around to help the market to continue its advance.

The Dow rose 73.39, or 0.7 percent, to 11,092.05. The Standard & Poor's 500 index rose 5.39, or 0.5 percent, to 1,197.52, while the Nasdaq composite index slipped 1.15, or 0.1 percent, to 2,480.11.

Falling stocks narrowly outnumbered those that rose on the New York Stock Exchange, where volume came to 1.3 billion shares compared with 1.8 billion Friday.

Bond prices slipped, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.81 percent from 3.77 percent compared with late Friday.

The dollar rose against other major currencies. Gold fell.

Crude oil fell $1.79 to $81.45 per barrel on the New York Mercantile Exchange.

Stocks dropped Friday after the SEC announced the charges against Goldman. The Dow ended with a loss of 125 points but was down as much as 170 points during trading. It closed above 11,000 last week for the first time in 18 months.

Goldman shares rose after falling for much of trading. The stock climbed $2.62, or 1.6 percent, to $163.32 after tumbling 12.8 percent Friday.

Citigroup rose 32 cents, or 7 percent, to $4.88 after the bank said its first-quarter profit improved because of strong investment banking operations. Citi also said its losses from failed loans fell slightly from the previous quarter, but executives remain cautious about a recovery. The bank was among the hardest hit by the credit crisis. Bank of America Corp. and JPMorgan Chase & Co. last week also posted big improvements in profits.

IBM rose $1.60, or 1.2 percent, to $132.23 in regular trading. The stock fell $2.75, or 2.1 percent, to $129.50 after hours.

Apple Inc., Coca-Cola Co., Delta Air Lines Inc. and Goldman Sachs are slated to report earnings on Tuesday.

UAL fell $1.17, or 5.1 percent, to $21.66, while AMR fell 38 cents, or 4.3 percent, to $8.41.

The Russell 2000 index of smaller companies fell 3.22, or 0.5 percent, to 711.40.

Britain's FTSE 100 fell 0.3 percent, Germany's DAX index fell 0.3 percent, and France's CAC-40 fell 0.4 percent. Japan's Nikkei stock average lost 1.7 percent.