Existing home sales stronger than expected; Lowe's reports 33% profit drop

Last update: 2:51 p.m. EST Feb. 25, 2008

NEW YORK (MarketWatch) -- U.S. stocks rallied Monday afternoon as investors found relief after Standard & Poor's affirmed its triple-A ratings for bond insurers MBIA and Ambac Financial.

"It was taking MBIA and Ambac off credit watch by S&P, both names rallied and are taking the whole market with them," said Art Hogan, chief market strategist at Jefferies & Co.

"The headlines appear to be more bullish than the negative underlying message," said analysts at Action Economics.

After rising more than 100 points earlier on, and detouring into negative territory, the Dow Jones Industrial Average was up 135.79 points to 12,516, with 24 of its 30 components posting gains.

The recent volatility in the stock market is likely to continue, with 150-point swings in the Dow likely, said Paul Nolte, director of investments at Hindsdale Associates.

"We've seen credit spreads widen out in the last few weeks; as long as they continue to widen, markets are still at risk because it indicates people are not interested in taking risk," said Nolte.