NEW YORK - Wall Street stumbled through another volatile session, but ended with a respectable gain Thursday after a multibillion-dollar deal between Dow Chemical Co. and Rohm and Haas Co. helped offset concerns about the financial sector and energy costs.
Shares of mortgage finance companies Fannie Mae and Freddie Mac skidded lower on worries they will be forced to sell more new shares than anticipated to compensate for losses from the housing slump. Several retail banks and investment banks also dropped, particularly Lehman Brothers Holdings Inc.
The declines in financials came after Treasury Secretary Henry Paulson told Congress that Wall Street can't expect the government to bail out troubled financial companies.
"For market discipline to effectively constrain risk, financial institutions must be allowed to fail," Paulson said.
Though investors found a reason to buy after Dow Chemical's $15 billion all-cash acquisition of the special chemicals maker Rohm and Haas, they are cautious ahead of quarterly earnings, in particular the financial results due next week.
The Dow Jones industrial average finished up 81.58, or 0.73 percent, at 11,229.02. Oil's resurgence above $141 a barrel briefly pulled the Dow into negative territory.
Broader stock indicators also finished higher. The Standard & Poor's 500 index gained 8.70, or 0.70 percent, to 1,253.39; the Nasdaq composite index rose 22.96, or 1.03 percent, to 2,257.85.