Stocks Vault Higher

Trading was active Thursday as investors sought bargains ahead of the long holiday weekend

Stocks finished sharply and broadly higher Thursday as the previous session's sell-off gave investors an opportunity to shop for bargains ahead of the extended holiday weekend. The stock market's rebound came as gold and crude oil prices retreated, which calmed inflation fears, and occurred in a session that also featured the expiration of futures and options on indices and individual stocks.

On Thursday, the Dow Jones industrial average gained 261.66 points, or 2.16%, to finish at 12,361.32. The S&P 500 index added 31.09 points, or 2.39%, to end the session at 1,329.51. The Nasdaq composite index rose 48.15 points, or 2.18%, to 2,258.11.

Activity in the broader market was positive. On the New York Stock Exchange, 23 stocks rose in price for every 8 that declined. On the Nasdaq, the ratio was 19-10 positive.

Thursday’s rally capped a wild week on Wall Street, kicked off by news over the weekend of a Federal Reserve-led effort to rescue troubled investment bank Bear Stearns (BSC) via a $2-a-share buyout by JPMorgan Chase (JPM). The week also saw a powerful rally spurred by a 75 basis point Fed rate cut on Tuesday and a dramatic last-minute sell-off in equity indexes on Wednesday.

Wall Streeters are hoping that the week to come will come up short in the drama department. The main economic data releases include February existing home sales on Monday, the S&P/Case-Shiller home price index for January and March consumer confidence on Tuesday. Reports on durable goods orders and new home sales are scheduled for Wednesday. Final fourth-quarter GDP and weekly initial jobless claims arrive Thursday, while Friday brings an update on February personal income.

Traders seemed to ignore negative news from commercial finance firm CIT (CIT). The shares plunged Thursday after the company said it is drawing upon its $7.3 billion in unsecured U.S. bank credit facilities, and will use the proceeds to repay debt maturing in 2008, including commercial paper, and provide financing to it core commercial franchises. Over the near term, CIT will continue to actively seek additional funding sources, as well as explore and execute on the sale of non-strategic assets and/or business lines. Late Wednesday, Fitch Ratings said it placed the issuer default rating and debt ratings of CIT on Rating Watch Negative.

Swiss banking giant Credit Suisse (CS) issued a profit warning because of its exposure to the US subprime loan crisis, according to an AFP dispatch, even as the nation’s finance minister said Swiss banks caught by the credit squeeze should not expect state help. CS also revised figures released last month, cutting its 2007 net profit to 7.76 billion Swiss francs from the February figure of 8.55 billion. The news sank the bank's stock price and raised questions about the health of the Swiss banking sector, coming on the heels of massive subprime-related writedowns of $18.4 billion dollars by UBS (UBS) for 2007.

Investors eyed a fresh batch of economic data Thursday. The Philadelphia Fed’s index of regional economic activity rebounded to -17.4 in March after dropping to -24 the month before and about in line with earlier expectations of a -18 reading... The employment index fell to -4.7 from +2.5 the month before, while new orders edged up to -9.3 from -10.9. Shipments rose to -6.3 from -12.2. Prices paid jumped to 54.4 from 46.6, while prices received fell to 21.2 from 24.3 in February. The 6-month ahead general business activity index improved sharply to -0.5 from -16.9 the month before.

The data will relieve markets, which started to expect much worse after the New York Fed survey disappointed earlier this week, says S&P Economics.

U.S. leading indicators index fell 0.3% in February, after a revised 0.4% decline in January (from -0.1% previously).