Wall Street ends erratic day higher

Share prices scored a moderate gain after a volatile session Wednesday in which the major stock indexes and the price of oil jumped in and out of positive territory.

Concerns about mortgage financiers Fannie Mae and Freddie Mac initially dragged down financial stocks. Wall Street is nervous that the government-chartered companies will need a bailout from the Treasury Department, a move that could wipe out shareholders’ equity.

Fannie Mae fell $1.61, or 27%, to $4.40, while Freddie Mac fell 92 cents, or 22%, to $3.25.

“I think there is still a lot of fear in the market in terms of the financial sector,” said Alan Haft, chief executive of Haft Financial in Newport Beach.

But share prices in the financial sector outside of Fannie and Freddie rebounded. They may have benefited from short covering, in which investors who bet that certain stocks would decline buy those shares to close out their bets.

An index of financial stocks in the S&P; 500 rose 1.7%.

Meanwhile, oil prices finished higher -- bad news for consumers, but a boost to energy company stocks, which jumped 2.8% as a group.

The Dow Jones industrial average rose 68.88 points, or 0.6%, to 11,417.43 after being down by nearly 60 points and up more than 100. Concerns about inflation and the financial sector led the Dow to post its worst two-day performance since late June on Monday and Tuesday with an overall drop of about 310 points.

Broader stock indicators also finished higher Wednesday. The Standard & Poor’s 500 index rose 7.85 points, or 0.6%, to 1,274.54, while the Nasdaq composite index rose 4.72 points, or 0.2%, to 2,389.08.

The Russell 2,000 index of smaller-company stocks rose 1.54 points, or 0.2%, to 731.60.

Advancing issues outnumbered decliners by about 8 to 7 on the New York Stock Exchange.

Oil, which has rebounded this week after dropping more than $30 from its levels above $145 a barrel in mid-July, climbed modestly Wednesday, even after the Energy Department said crude inventories rose much more than forecast last week. Oil futures finished up 45 cents at $114.98 a barrel in New York trading.

Government bond yields fell. The benchmark 10-year Treasury note dropped to 3.8% from 3.83% late Tuesday.

The dollar rose against other major currencies. Gold prices fell slightly.

Among financial stocks, Lehman Bros. Holdings, once the biggest underwriter of mortgage bonds, added 66 cents, or 5.1%, to $13.73. Bank of America, the second-largest U.S. bank as measured by assets, advanced $1.21 to $29.29. Wachovia, the fourth-largest U.S. bank, climbed 60 cents, or 4.2%, to $14.90.

Among the day’s market highlights:

* Hewlett-Packard rose $2.47, or 5.7%, to $46.16 after posting better-than-expected quarterly results late Tuesday, suggesting that the computer maker might be somewhat immune from a slowing global economy. It was the biggest gainer among the 30 stocks that make up the Dow Jones industrial average.

Rival Dell advanced 53 cents to $24.97. Apple Inc., the seller of iPhones and Macintosh computers, gained $2.31 to $175.84.

* Overseas, key stock indexes advanced 1% in Britain, 0.6% in Germany and 0.8% in France. Shares slipped 0.1% in Japan.