Dow climbs 189 points

Stocks rallied Monday on hopes that troubled bond insurers will emerge from the sub-prime mortgage debacle on solid footing. The Dow Jones industrials rallied nearly 190 points.

Share prices shot up after Standard & Poor’s affirmed its credit ratings for MBIA, the world’s largest bond insurer.

Other developments helping the market included a report from the National Assn. of Realtors showing that sales of existing homes fell less than forecast in January.

And credit card giant Visa disclosed plans for what could be the country’s largest initial public offering. The IPO was seen as a positive for stocks because a major financial company felt confident enough to go public despite continuing market turbulence

On the bond insurance front, investors had feared that downgrades would lead to billions of dollars in additional write-downs of securities held by already troubled banks and investment firms. The rating firms have been considering such downgrades because the insurers face large potential losses after diversifying in recent years into covering securities backed by sub-prime mortgages.

Investors have been looking for any sign that depressed financial stocks will make it through the credit crisis, said Chris Johnson, president of Johnson Research Group.

Experts believe that keeping bond insurers whole will spare greater losses for major global banks and brokerages.

“Even the smallest bit of positive news and the market takes off,” Johnson said. “Investors get excited if they sense a bottom in the financials because they’ve been the Achilles’ heel of this market.”

But the news wasn’t enough to lift shares of banks such as Citigroup after Goldman Sachs said it expected several more multibillion-dollar write-downs across the sector. Citigroup fell 38 cents, or 1.5%, to $24.74.

The Dow jumped 189.20 points, or 1.5%, to 12,570.22.

Broader stock indexes also posted solid advances. The Standard & Poor’s 500 index rose 18.69, or 1.4%, to 1,371.80, while the Nasdaq composite index added 24.13 points, or 1.1%, to 2,327.48.

The Russell 2,000 index of smaller companies surged 15.03 points, or 2.2%, to 710.46.

Advancing issues outpaced decliners by about 2 to 1 on the New York Stock Exchange.

Yields on government bonds climbed. The 10-year Treasury note rose to 3.9% from 3.8% late Friday, as some investors sold bonds to buy stocks.

The dollar was mixed against most major currencies, while gold prices fell.

Oil prices hovered near $100 a barrel with supply concerns heightened by a Turkish military incursion into northern Iraq and warnings by Iran against further international sanctions.

Crude futures rose 42 cents to $99.23 on the New York Mercantile Exchange.

Wheat prices, already elevated by bad weather this winter in many wheat-growing regions around the world, shot up after Kazakhstan said it would slow grain exports by imposing customs duties. Wheat futures for May delivery surged to the 60-cent daily trading limit to $11.245 a bushel on the Chicago Board of Trade, less than half a dollar from the commodity’s recent all-time high.

Among the day’s market highlights:

* TakeTwo Interactive Software soared $9.53, or 55%, to $26.89 after rival Electronic Arts renewed its bid to buy the company. The stock is now trading at a 52-week high on speculation the bid could go hostile. Electronic Arts fell $2.60, or 5.2%, to $47.14.

* Genentech surged $6.36, or 8.9%, to $77.96 after the Food and Drug Administration approved the use of the company’s Avastin drug in breast cancer patients.

* Lowe’s gained 91 cents, or 3.9%, to $24.50 after the home-improvement retailer said its fourth-quarter profit dropped by a third but predicted that sales would improve slightly in 2008.

* Stocks rallied sharply in overseas markets. Key indexes jumped 3.1% in Japan, 1.9% in Britain, 1.1% in France and 2% in Germany.