Stocks rose Monday as investors welcomed the U.S. government rescue of troubled mortgage giants Fannie Mae and Freddie Mac. Stocks surged in the morning, with the Dow industrials up 350 points, but questions about what the rescue will really mean for the housing market lessened the rally's momentum in the afternoon. The Bush administration said Sunday that it was taking control of the mortgage backers in an attempt to help stabilize the battered housing market and bring down mortgage rates. Treasury Secretary Henry Paulson said the companies were being put under government control and both chief executives were being replaced. The two government-backed companies own or back about half the mortgage debt in the United States and have lost billions in the housing market collapse. The government plan should lower mortgage rates by lowering Fannie and Freddie's borrowing costs. However, analysts do not agree on how much the plan will be able to help the housing market and weak U.S. economy. Light sweet crude oil for October delivery rose 11 cents to $106.34 a barrel on the New York Mercantile Exchange, after ending the previous session at a five-month low. Prices rose Monday as Hurricane Ike headed toward the Gulf of Mexico. The Dow Jones industrial average rose 289.78, or 2.6 percent, to 11,510.74. Financial firms Bank of America, Citigroup, and J.P. Morgan Chase rose on the government rescue news. The broader Standard & Poor's 500 index rose 25.48, or 2 percent, to 1,267.79. The technology-heavy Nasdaq composite index rose 13.88, or 0.6 percent, to 2,269.76. Shares of Nvidia fell after the graphic chipmaker's stock was downgraded by a brokerage. RF Micro Devices fell 11 percent after being downgraded by a brokerage. Other losers included Oracle, Google, and Apple. The New York Stock Exchange composite index rose 134.87 to 8,166.62. The American Stock Exchange composite index fell 7.31 to 1,921.51. And the Russell 2000 index rose 14.01 to 732.86.
