Stocks Post Modest Gains As Financials Hang Tough

August 20, 2008 6:05 p.m. EST

New York, NY (AHN) - U.S. markets were able to squeeze out modest gains on Wednesday as financials moved higher despite the continued woes of Freddie Mac and Fannie Mae.

The Dow Jones Industrial average tacked on 68 points or 0.6 percent. Hewlett Packard, coming off a solid earnings report Tuesday night, provided strength to the index. HP shares rose 5.6 percent to $46.16 a share.

The S&P 500 gained nearly 8 points or 0.6 percent as six of 10 major economic sectors rose on Wednesday. The Nasdaq Composite added 4.5 points or 0.20 percent on the session.

The financial sector was plenty volatile on Wednesday with Fannie and Freddie shedding more than 20 percent as worries of a government takeover are still prevalent. The sector traded down 1.6 percent before rallying off lows to finish with a 1.7 percent gain. Strength was found in the diversified banking stocks as they added 3.7 percent on Wednesday.

Crude oil prices saw plenty of volatility, trading lower by nearly $2 a barrel after the Energy Department reported an unexpected rise in weekly inventory levels. Oil reserves rose by 9.4 million barrels, much higher than the 1.7 million economists expected. The commodity rallied despite the bearish news to settle at $114.98, up 45 cents a barrel.

With the rebound in oil, the energy sector posted a 2.8 percent gain. The materials sector was strong as well, up 2.1 percent on the session.

Weekly unemployment claims data is set for release before the market opens on Thursday.