Positive close on Wall Street

Wall Street staged a dramatic turnaround today, shooting higher in the last half-hour of trading amid word that a bail out plan for troubled bond insurer Ambac Financial could be announced next week.

CNBC reported shortly before the closing bell that a plan to help shore up the finances of Ambac Financial Group Inc. could be announced on Monday or Tuesday. Ambac shares jumped on the report and finished up 1.48 dollars, or 16%, at 10.71.

The market’s turnaround came after nearly two days selling. The Dow Jones industrial average had been down more than 100 points, but by the close, showed a 225-point reversal from its lows of the session.

“There’s probably some validity to the rumours,” said Jim Herrick, manager of equity trading at Baird & Co., referring to traders’ speculation about Ambac.

“With the overall financial crunch we’ve experienced, this brings new confidence in the sector.”

According to preliminary calculations, the Dow rose 96.72, or 0.79%, to 12,381.02.

Broader stock indicators also moved higher. The Standard & Poor’s 500 index rose 10.58, or 0.79%, to 1,353.11, and the Nasdaq composite index rose 3.57, or 0.16%, to 2,303.35.

Advancing issues outnumbered decliners by about three to two on the New York Stock Exchange, where volume came to 1.42 billion shares.