U.S. Markets Shake Off Early Losses, Close Higher

September 16, 2008 5:06 p.m. EST

New York, NY (AHN) - All three major indices opened Tuesday sharply lower on poor earnings news out of Goldman Sachs and further worries of AIG's ability to stay solvent. Buyers took advantage of the lower prices though, pushing the markets higher for the session.

The Dow Jones Industrial average rose 141 points or 1.3 percent despite a 21 percent drop in American International Group (AIG). Large gains in JP Morgan and Bank of America, both up 11 percent, help offset the AIG decline.

Shares of AIG did rally off morning lows. The stock opened the session down 58 percent after Standard & Poor's cut its credit ratings on the insurance giant. Optimism crept into the stock when rumors that the Fed would consider aiding in the company's liquidity needs surfaced.

The S&P 500 added 20 points or 1.75 percent. Airline stocks provided the most strength, up 13.7 percent on Tuesday.

Tech rebounded as well, the Nasdaq Composite added 28 points or 1.28 percent. The semiconductor sector helped push tech higher, gaining 1.48 percent on the session.

Crude oil continued its downward slide, shedding $4.56 a barrel to settle at $91.51 on the New York Mercantile Exchange. The commodity is now down $55 from the record high of $147 hit on July 11.

Goldman Sachs reported a 70 percent drop in quarterly earnings, its worst ever result since going public in 1999. Shares of Goldman opened the day at $116, levels not seen since 2005. The decline may have been too much as investors bought the stock up, shares closed at $133.01, down 1.8 percent.

In other corporate news, Barclays agreed to purchase Lehman Brothers investment banking segment for roughly $2 billion. The deal will allow up to 9,000 Lehman employees to land jobs at Barclays according to reports.

Wednesday's session will see August housing starts data as well as weekly crude inventories data.