Falling oil prices and an uptick in consumer confidence sent stocks soaring on Tuesday, while a big write-down at Merrill Lynch (NYSE: MER) raised hopes that the troubled credit markets may finally be nearing a bottom.
Merrill’s plan to sell collateralized debt obligations (CDOs) for 22 cents on the dollar suggested a firm bottom for the troubled securities — and raised hopes that the next round of write-downs will be the last.
The major indexes soared 2.4% on the news.
Tech stocks were led higher by SAP (NYSE: SAP), which surged 10% on surprisingly strong results and guidance that suggested that tech spending continues to weather the downturn better than most sectors.
Alcatel-Lucent (NYSE: ALU) gained 6% after replacing its chairman and CEO after reporting yet another loss.
ILOG (NASDAQ: ILOG) soared 31% on a buyout deal with IBM (NYSE: IBM).
Palm (NASDAQ: PALM) surged 13% on strong Centro sales, and Websense (NASDAQ: WBSN) was up 7% on its quarterly results.
But the day also saw a number of names sinking on disappointing earnings reports, including Sony (NYSE: SNE), Network Equipment (NYSE: NWK), PLX Technologies (NASDAQ: PLXT), Trident Micro (NASDAQ: TRID), PC Connection (NASDAQ: PCCC), Harmonic (NASDAQ: HLIT) and Cognex (NASDAQ: CGNX).
Yahoo (NASDAQ: YHOO) was little changed after T. Boone Pickens sold his stake in the company and criticized management for failing to arrive at a deal with Microsoft (NASDAQ: MSFT).
Zoran (NASDAQ: ZRAN) and OmniVision (NASDAQ: OVTI) fell on JP Morgan downgrades.
The Nasdaq soared 55 to 2319, the S&P gained 28 to 1263, and the Dow surged 266 to 11,397, as all three indexes made up Monday’s losses. Volume rose to 5.35 billion shares on the NYSE, and 2.35 billion on the Nasdaq. Advancers led by a 26-8 margin on the NYSE, and 20-8 on the Nasdaq. Upside volume was 82% on the NYSE, and 76% on the Nasdaq. New highs-new lows were 29-132 on the NYSE, and 51-101 on the Nasdaq.
