Ambac Bailout Talk Prompts Late U-Turn

By TIM PARADIS

By Tim Paradis

The Associated Press

NEW YORK

Wall Street staged a turnaround Friday, shooting higher in the last half-hour of trading after word that a bailout plan for bond insurer Ambac Financial could be announced next week. The major indexes were narrowly mixed for the week amid choppy trading.

CNBC reported shortly before the closing bell that a plan to help shore up the finances of Ambac Financial Group Inc. could be announced Monday or Tuesday.

The market’s turnaround came after nearly two full days of selling. The Dow Jones industrial average had been down nearly 130 points but by the close showed a 225-point reversal.

“There’s probably some validity to the rumors,” said Jim Herrick, manager of equity trading at Baird & Co., referring to traders’ speculation about Ambac. “With the overall financial crunch we’ve experienced, this brings new confidence in the sector.”

For the week, the Dow edged up 0.27 percent, while the Standard & Poor’s 500 rose 0.23 percent and the Nasdaq lost 0.79 percent.

Bond prices were down, reversing alongside stocks. The dollar was mixed against other major currencies, while gold prices fell. Light, sweet crude rose 58 cents to settle at $98.81 a barrel on the New York Mercantile Exchange.

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