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Stocks closed with solid gains after investors brushed aside worries about tightening credit and focused on corporate profit prospects. All major gauges finished higher, helped by cooling credit markets fears and a bit of deal making on Wall Street.

Today, the Dow Jones industrial average closed up 92.84 or 0.70% to 13,358.31, the broader S&P 500 closed up 14.96 or 1.03% to 1,473.91, and the Nasdaq composite index closed up 21.04 or 0.82% to 2,583.28.

Market breadth was positive. Winners beat losers by 2 to 1 on the New York Stock Exchange on volume of 2.03 billion shares. Advancers topped decliners by 17 to 13 on volume of 2.33 billion shares.

Stocks moved higher after Wall Street’s recent fears about the housing and credit markets subsided. A number of brokerage firms and strategists reached the conclusion that the problems in the credit market do not imply that the economy and earnings are going to go into a tailspin. Investors have worried that tougher conditions in credit markets could raise the cost of borrowing for companies, hurting corporate earnings and slow the buyout boom, which has helped prop up stock prices.

Shares of Ingersoll-Rand closed up $3.63 to $51.77, on news that it may sell its Bobcat unit for $4.9 billion to a South Korean firm Doosan Infracore. Shares in Doosan, formerly known as Daewoo Heavy Industries & Machinery, surged 14.9%, as this move will nearly double its sales and make it the world’s seventh largest construction equipment maker.

Stock of Verizon Communications closed down $0.49 to $41.51, on announcing that it would buy Rural Cellular for $757 million. Stock of Rural cellular closed up $10.95 or 34% to $42.76.

Shares of Sun Microsystems closed down $0.03 to $4.89, despite reporting better than expected earnings. Net income was $329 million, compared with a year-earlier net loss of $301 million. Revenue rose to $3.84 billion from $3.83 billion, while operating expenses fell to $1.49 billion from $1.97 billion.

Shares of Dow Jones closed down $2.89 or 6% to $51.56, after News Corp stated that it may no longer proceed with the $5 billion bid if does not receive more support from the Bancroft family, which holds a controlling stake in the company. The Bancroft family, which controls more than 64% of Dow Jones’s voting shares, is expected to decide by the end of Monday whether to support the Murdoch bid.

Stock of American Home Mortgage Investment tumbled in pre-market trade and did not resume trading Monday after it announced that its banks are demanding it put more cash after writing down the value its loan and security portfolios significantly. The company recently commanded a roughly 2.5% share of the U.S. mortgage market.

U.S. light crude for September easing 22 cents at $76.80 a barrel on the New York Mercantile Exchange.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter