Wall Street goes up amid Ambac bailout

NEW YORK – Wall Street managed a moderate gain in an erratic session Wednesday as investors sorted through a downbeat Federal Reserve assessment of the economy and were also disappointed by a plan to bail out troubled bond insurer Ambac Financial Group Inc.

The Fed’s Beige Book report on regional economies indicated growth at the start of the year was sluggish and accompanied by rising price pressures. The report also cited tighter credit standards.

Meanwhile, Ambac said it plans to issue more than $1 billion in common stock to help shore up its battered balance sheet. Investors had hoped for a contribution from global banks to help Ambac, whose plan will dilute its outstanding shares.

The Dow Jones industrials were up as much as 120 points earlier in the session after a stronger-than-expected reading on the health of the service sector and figures on worker productivity calmed fears about the economy.

The Dow rose 41.19, or 0.34 percent, to 12,254.99.

Broader stock indicators were higher. The Standard & Poor’s 500 index added 6.95, or 0.52 percent, to 1,333.70, while the Nasdaq composite rose 12.53, or 0.55 percent, to 2,272.81.

Bond prices fell sharply after Ambac’s announcement. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.69 percent from 3.63 percent late Tuesday.

The dollar was mixed against other major currencies, while gold prices rose.

Oil surged, rising a remarkable $5 a barrel to a record of more than $104 a barrel after the government reported a surprise drop in crude oil stockpiles and OPEC held production levels steady. Light, sweet crude for April delivery jumped $5 to settle at a record $104.52 a barrel on the New York Mercantile Exchange after earlier rising to $104.64.

Advancing issues outnumbered decliners by more than 5 to 4 on the New York Stock Exchange, where consolidated volume came to 4.12 billion shares, down from 4.61 billion on Tuesday.

The Russell 2000 index of smaller companies rose 2.76, or 0.41 percent, to 683.74.

Overseas, Japan’s Nikkei stock average closed down 0.16 percent. In afternoon trading, Britain’s FTSE 100 rose 1.49 percent, Germany’s DAX index rose 2.12 percent, and France’s CAC-40 advanced 1.72 percent.