Stocks rise modestly as Street mulls Lehman plan

NEW YORK — Stocks ended a temperamental session moderately higher Wednesday as investors bought up the stocks of energy, materials and consumer-staple companies, but remained cautious about the beleaguered financial sector.

Bank and brokerage stocks finished mostly lower after Lehman Brothers Holdings Inc. said it plans to sell a majority stake in its investment management business and spin off its troubled mortgage assets.

On Tuesday, unease about Lehman touched off a broad selloff on worries that the No. 4 U.S. securities company had few options to raise capital. The already beaten down stock lost nearly half its value Tuesday as investors fretted the company would succumb to soured mortgage debt and other financial ills.

Bargain-seeking investors often pick over hard-hit stocks after big pullbacks, so some buying wasn't surprising Wednesday. Investors bought up energy names after they tumbled Tuesday and looked to defensive areas like consumer staples.

But Lehman shares fell another 54 cents, or 6.9 percent, to close at $7.25, after plummeting 45 percent on Tuesday.

"They're trying to buy time, but it's very dangerous on Wall Street to buy time. You need to be able to do business," Axel Merk, portfolio manager at Merk Funds, said of Lehman's plans. "I don't think we're at the end of the financial problems in the markets."

According to preliminary calculations, the Dow Jones industrial average rose 38.19, or 0.34 percent, to 11,268.92, after dipping briefly into negative territory, rising by nearly 150 points, and then pulling back again.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 7.53, or 0.61 percent, to 1,232.04, and the Nasdaq composite index rose 18.89, or 0.85 percent, to 2,228.70.

The Dow fell 2.4 percent Tuesday, essentially erasing big gains logged Monday, while the S&P 500 fell 3.4 percent and the Nasdaq composite index lost 2.6 percent.

Bond prices fell Wednesday after a run-up Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.61 percent from 3.59 percent late Tuesday. The dollar moved higher against most other major currencies, while gold prices fell.

Oil fell in fractious trading as strength in the dollar and indications of a weakening economy overshadowed OPEC's decision to cut back excess production. Light, sweet crude fell 68 cents to settle at $102.58 per barrel on the New York Mercantile Exchange.