Bailout Hopes Lift Markets Modestly Higher

The markets recovered in late afternoon trading to close modestly higher with the Dow adding 12 points to 8212 as crude oil prices retreated and optimism grew that the federal government will bail out banks once again. Nasdaq climbed 22 points to 1512.

On the upside

Warburg Pincus will invest $175 million in Nuance Communications (Nasdaq: NUAN) for a 7% stake in the company.

Retreating oil prices lifted shares of American Airlines parent AMR (NYSE: AMR), Delta Air Lines (NYSE: DAL) and Continental Airlines (NYSE: CAL).

Shares of Corinthian Colleges (NYSE: COCO) climbed over reports that the proposed House stimulus bill will increase student loans.

On the downside

Redwood Trust (NYSE: RWT) provided a preliminary fourth quarter book value that fell from the previous quarter and warned of an impairment charge of approximately $110 million.

Shares of regional bank Fifth Third Bancorp (NYSE: FITB) plunged over concerns of increasing loan defaults.

Reports circulated that Yahoo's (Nasdaq: YHOO) newly appointed chief executive Carol Bartz has reservations about a deal with Microsoft (Nasdaq: MSFT).

In the broad market, advancing issues barely outpaced decliners by a slim margin on the NYSE and by nearly 5 to 4 on Nasdaq. The Russell 2000 which tracks small cap stocks surged 9 points to 463.
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