Stocks gained Monday after Citigroup said it will repay its government bailout funds and Dubai received $10 billion to cover its debt, easing worries that the emirate might default on billions it owes.
The Dow Jones industrial average (INDU) rose 22 points, or 0.2%. The S&P 500 index (SPX) gained 5 points, or 0.5%. The Nasdaq composite (COMP) rose 10 points, or 0.5%.
The Dow closed at a 14-month high Friday after better-than-expected reports on retail sales and consumer sentiment, but broader gains were limited by tech weakness and a strong U.S. dollar.
Citigroup: Citigroup (C, Fortune 500) announced early Monday it has reached an agreement with the government to repay $20 billion it has received in TARP funds. The bulk of the bank's payment will be funded through a $17 billion common stock offering.
Citigroup also said the Treasury will sell up to $5 billion of the common stock it holds in a concurrent offering and the remainder over the next year.
Dubai: Fears that Dubai might default on billions of dollars in debt eased Monday when its fellow United Arab Emirate, Abu Dhabi, pledged $10 billion in financing. (Abu Dhabi gives Dubai $10 billion bailout)
The announcement allays concerns raised last month when Dubai sought a six-month delay in debt payments for Dubai World, the government's flagship holding company. Global markets, which fell sharply when the Dubai debt problems were first raised, were mostly higher in Monday trading.
Exxon-XTO deal: Dow component Exxon Mobil (XOM, Fortune 500) said it will buy XTO Energy (XTO, Fortune 500) in a $31 billion all-stock deal that values XTO shares at a 25% premium to its Friday closing price.
Exxon shares fell 2.5% and limited any gains on the Dow. XTO shares rallied 17%.
Banks: President Obama will meet Monday with top executives of some of the nation's biggest lenders, including Capital One (COF, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Morgan Stanley (MS, Fortune 500), PNC (PNC, Fortune 500) and Wells Fargo (WFC, Fortune 500). The president is expected to say he wants to see more loans for the sake of economic recovery.
Obama is expected to urge bankers to enact a number of changes, including greater lending, curbing runaway compensation practices, as well as supporting financial reform efforts.
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Week ahead: No major economic reports are due Monday. But reports on inflation, housing and industrial production are due out later this week.
The Federal Reserve will take center stage this week as the U.S. central bank opens its final monetary policy meeting of the year on Tuesday.
Investors will also focus on corporate results from a number of major companies. Consumer electronics giant Best Buy (BBY, Fortune 500) posts results Tuesday, and software maker Oracle (ORCL, Fortune 500) reports Thursday.
Meanwhile, trading could be choppy towards the end of the week due to the quadruple options expiration, a quarterly event when stock index futures and options and individual stock futures and options all expire at the same time.
World markets: European indexes were modestly higher in afternoon trading after the Abu Dhabi announcement on Dubai. Stocks in Asia ended mixed, with Tokyo's Nikkei index down slightly and Hong Kong's Hang Seng index up 0.8%.
Other markets: The dollar slipped against the yen and euro, but was slightly higher versus the U.K. pound.
Crude oil for January delivery fell 33 cents to $69.54 a barrel.
Gold futures for February delivery rose $2.20 to $1,122.10 an ounce.
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