Stocks lift even as oil prices soar to $122 a barrel

Extending its sharp ascent, crude oil climbed past $122 a barrel on the New York Mercantile Exchange as traders reacted to the weakening U.S. dollar and the possibility of supply threats. In midday trading, it was up $1.29 at $122.26 a barrel on the New York Mercantile Exchange.

High oil prices threaten to weigh on consumers' discretionary spending.

But the stock market pared steep early losses, with investors apparently looking past Tuesday's downbeat news, which included not only high oil prices but also wider-than-expected quarterly losses at Swiss bank UBS, government-sponsored mortgage company Fannie Mae and homebuilder D.R. Horton Inc.

Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said it is a good sign that stock traders started buying again when the Standard & Poor's briefly dipped below the technically significant 1,400 market.

"We had some negative news this morning, and we've shaken it off. It's encouraging," Detrick said. He added, though, that investors seem anxious about computer networking equipment maker Cisco Systems Inc.'s quarterly results after the market closes.

In midday trading, the Dow Jones industrial average rose 13.68, or 0.11 percent, to 12,983.22.

Broader stock indicators also rebounded. The Standard & Poor's 500 index rose 6.23, or 0.44 percent, to 1,413.72, and the Nasdaq composite index rose 10.43, or 0.42 percent, to 2,474.55.

Bond prices edged higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, dipped to 3.86 percent from 3.87 percent late Monday.

In recent weeks, stronger-than-expected results from companies outside the battered financial and housing sectors helped the stock market rebound late last week to levels not seen since early January.

Weakness in the financial and housing-related sectors on Tuesday initially sparked some selling on Wall Street, but those dips were soon met by bargain-hunters, who are betting that financials are a good buy right now given their low prices.

Fannie Mae shares rebounded to rise $1.80, or 6.4 percent, to $30.10 on the belief that the government-sponsored mortgage company may be putting the worst of the credit crisis behind it. Fannie Mae on Tuesday reported a larger-than-expected first-quarter loss of $2.2 billion, and said it plans to lower its dividend and raise $6 billion in additional capital.

In other earnings news Tuesday, UBS reported a loss of nearly $11 billion and said it is reducing its work force by about 7 percent. UBS shares dipped 20 cents to $34.10.

Homebuilder D.R. Horton reported a quarterly loss of $1.3 billion and halved its dividend to 7.5 cents a share. The homebuilder's shares rose 60 cents, or 3.6 percent, to $16.56.

Meanwhile, Wachovia Corp. said it is nearly doubling its previously reported loss for the first quarter to $708 million after reviewing its portfolio of bank-owned life insurance. Wachovia's stock rose 35 cents to $30.13.

Gold climbed, while the dollar fell against most other major global currencies.

The Russell 2000 index of smaller companies rose 4.77, or 0.66 percent, to 729.12.

Advancing issues outnumbered decliners by about 9 to 7 on the New York Stock Exchange, where volume amounted to a light 531.7 million shares.

Overseas, Japan's stock market was closed for a holiday. In Europe, Britain's FTSE index finished flat, Germany's DAX index fell 0.50 percent, and France's CAC-40 fell 0.44 percent.

Cisco Systems and Walt Disney Co., one of the 30 companies that make up the Dow, are scheduled to release quarterly results after the market closed Tuesday.

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