Stocks rose on Monday, rebounding from last week's heavy losses as investors hunted for bargains in financial services and other sectors.
Shares of No. 1 U.S. bank Citigroup Inc (NYSE:C), up 4.3 percent at $34.54, helped to lift both the S&P and Dow. An index of financial company shares was up 1.9 percent.
In an effort to stabilize the credit markets, the top three U.S. banks agreed on the structure of a backup fund of at least $75 billion, according to a New York Times report.
It's just a bit of bargain-hunting, said Giri Cherukuri, head trader at OakBrook Investments LLC, in Lisle, Illinois. People over the weekend were re-evaluating some of the stocks that sold off last week, like the financials.
We'll see more news of banks teaming up to set up funds and take care of their securities; but overall, I'd be wary about investing in financials, as there could be more bad news with fourth-quarter earnings.
Trading was volatile and lighter than usual, with bond markets in the United States closed for the Veterans Day holiday, and no major U.S. economic indicators scheduled.
The Dow Jones industrial average was up 66.17 points, or 0.51 percent, at 13,108.91. The Standard & Poor's 500 Index was up 5.73 points, or 0.39 percent, at 1,459.43. The Nasdaq Composite Index was up 4.14 points, or 0.16 percent, at 2,632.08.
Last week, the Nasdaq lost 6.5 percent -- or 182 points. The Dow dropped 4.1 percent and the S&P 500 declined 3.7 percent.
The financial sector was on track to post its first three-day string of positive days since early October. Financial shares have been among the hardest hit in recent weeks as announcements and talk of writedowns from risky loans worried investors about credit market problems.
Among Monday's decliners were shares of E*Trade Financial Corp. (NYSE:ETFC), which fell more than 50 percent -- its biggest one-day drop ever -- to $3.97, after Citigroup downgraded the stock to sell and said investors cannot ignore the risk of possible bankruptcy at the online broker.
The online brokerage late on Friday it expects more write-downs in its asset-backed securities portfolios and would no longer meet previously issued earnings forecasts.
(Editing by Kenneth Barry)