Wall Street edges higher, led by oil stocks

2007-12-28 07:59:51 Reuters

NEW YORK (Reuters) - Stocks edged higher on Friday, clawing back from the previous session's steep losses, led by energy shares such as Exxon Mobil (XOM.N) as the price of oil rose.

A report showing business activity in the Midwest expanded in December at the fastest pace since June also lent some support to stocks.

However, the gains were kept in check by a government report showing U.S. new home sales fell much more than expected in November, to the slowest sales pace in 12 years.

That weighed on home builders and the Dow Jones home construction index (.DJUSHB) fell 2.2 percent.

Trading volume remained thinned by the holidays.

"The housing market is in a difficult situation. But you look at the Chicago purchasing index, and that came in above expectations, so it seems the economy is doing OK except for the housing sector," said Owen Fitzpatrick, head of the U.S. Equity Group at Deutsche Bank Private Wealth Management in New York.

The Dow Jones industrial average (.DJI) was up 34.71 points, or 0.26 percent, at 13,394.32. The Standard & Poor's 500 Index (.SPX) was up 5.04 points, or 0.34 percent, at 1,481.41. The Nasdaq Composite Index (.IXIC) was up 10.41 points, or 0.39 percent, at 2,687.20.

Exxon Mobil (XOM.N) shares rose 0.9 percent to $94.53, while an index of oil stocks (.OIX) was also up 0.9 percent.

Shares of MBIA Inc (MBI.N) fell 12.7 percent on a report in the Wall Street Journal that billionaire investor Warren Buffett is starting up a rival bond insurer that aims to make it cheaper for cities and states to borrow.

The move comes as the credit ratings of major U.S. bond insurers, including MBIA and a unit of Ambac Financial (ABK.N), look shaky. The start-up insurer, Hathaway Assurance Corp., part of Buffett's Berkshire Hathaway Inc, was set to begin operating on Friday in New York state.