The Wall Street Journal-20080129-WellCare- Newmont- Nymex Rise

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WellCare, Newmont, Nymex Rise

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Stocks rose as the latest in a long line of dismal housing reports raised hopes of an aggressive rate cut from the Federal Reserve, a boon for banks like Citigroup and gold miners such as Newmont Mining.

There was give-and-take in the deal market, with Nymex Holdings a major winner and Alliance Data Systems a major loser.

New-home sales fell to the lowest mark in 12 years in December and prices also slid. Spurred by that data, fed-funds futures, a prediction market for rate changes, reflected increased odds of a half-percentage-point cut tomorrow. That sparked a rally among stocks that benefit from lower interest rates. Citigroup added $1.01, or 3.8%, to $27.65, and home builder Toll Brothers rose 91 cents, or 4.2%, to 22.37.

"We may see 125 basis points [1.25 percentage points] of cuts" in the space of little over a week, said Steven Goldman, chief market strategist at Weeden & Co. When interest rates come down sharply, "it usually bodes well for the stock market in general."

Generally, "leadership tends to emerge when the Fed becomes aggressive -- financial stocks tend to outperform the broad market, followed by retailers, followed by home builders." Until the most recent rate cut, those leadership groups continued to be "trashed," Mr. Goldman said, but they may finally be gaining traction.

Commodities futures, principally priced in dollars, rallied on the expectation of loosened monetary policy. Newmont Mining rose 1.96, or 3.7%, to 55.22 as gold prices set record highs. Gold's move reflected rate-cut anticipation and also the idling of South African mines because of a power shortage. American depositary receipts of AngloGold Ashanti fell 1.26, or 2.9%, to 41.75 while Harmony Gold Mining shed 59 cents, or 5.4%, to 10.28.

Nymex Holdings, surged 9.34, or 8.7%, to 116.50 after a report the operator of the New York Mercantile Exchange has talked with Chicago peer CME Group about a potential $11 billion buyout.

Alliance Data Systems plunged 23.12, or 35%, to 42.48 after Blackstone Group said it probably wouldn't complete its leveraged buyout of the payment and credit-card processor because of onerous approval conditions set by a regulator. Alliance Data disputed Blackstone's position that those conditions were a deal breaker. Blackstone fell 21 cents, or 1.1%, to 19.15.

SLM, better known as Sallie Mae, rose 57 cents, or 2.9%, to 20.45 after the student lender refinanced a $30 billion credit line and ended its dispute with private-equity firm J.C. Flowers, which pulled out of a buyout deal.

New York Times rose 1.41, or 9.6%, to 16.07 after two hedge funds indicated they were seeking seats on the board of the newspaper publisher, possibly the first move in a push toward a sale.

Black & Decker slipped 10 cents to 69.88 after the maker of power drills and lawnmowers warned that deterioration in its business may continue without a housing-market recovery.

Verizon Communications rose 35 cents to 38.11 after the telecommunications company posted growth in its wireless business.

Personnel moves affected some shares, too.

Sears Holdings (Nasdaq) rose 1.28, or 1.3%, to 100.28. Controlling shareholder Edward Lampert reshuffled the leadership of the department-store chain, installing Bruce Johnson as an interim replacement for Chief Executive Aylwin Lewis.

WellCare Health Plans rose 4.96, or 12%, to 48.08 after three top executives quit the manager of Medicaid and Medicare health-care plans. Those departures came as WellCare disclosed that a federal inquiry is focused on relationships between various plans and units involved with Florida behavioral-health operations.

Corning rose 73 cents, or 3.3%, to 23.10 after the maker of glass and optical fiber projected first-quarter profit surpassing the Wall Street estimate, helped by demand for flat-panel televisions screens.

Among energy issues, Halliburton tacked on 46 cents, or 1.4%, to 33.55 after the oil-field services company posted quarterly profit growth, helped by Asian demand.

General Electric rose 72 cents, or 2.1%, to 34.72 after the conglomerate agreed to buy a manufacturer of oil-services equipment, part of steel-tube maker Tenaris, for $1.115 billion. American depositary receipts of Tenaris rose 1.64, or 4.3%, to 39.62.