US stocks rise modestly

US stocks ended a temperamental session moderately higher today as investors bought up the stocks of energy, materials and consumer-staple companies, but remained cautious about the beleaguered financial sector.

Bank and brokerage stocks finished mostly lower after Lehman Brothers Holdings Inc. said it plans to sell a majority stake in its investment management business and spin off its troubled mortgage assets.

On Tuesday, unease about Lehman touched off a broad sell off on worries that the No. 4 US securities company had few options to raise capital. The already beaten down stock lost nearly half its value Tuesday as investors fretted the company would succumb to soured mortgage debt and other financial ills.

Bargain-seeking investors often pick over hard-hit stocks after big pullbacks, so some buying wasn’t surprising. Investors bought up energy names after they tumbled on Tuesday and looked to defensive areas like consumer staples.

But Lehman shares fell another 54 cents, or 6.9%, to close at 7.25, after plummeting 45% on Tuesday.

“They’re trying to buy time, but it’s very dangerous on Wall Street to buy time. You need to be able to do business,” Axel Merk, portfolio manager at Merk Funds, said of Lehman’s plans. “I don’t think we’re at the end of the financial problems in the markets.”

According to preliminary calculations, the Dow Jones industrial average rose 38.19, or 0.34%, to 11,268.92, after dipping briefly into negative territory, rising by nearly 150 points, and then pulling back again.

Broader stock indicators also rose. The Standard & Poor’s 500 index rose 7.53, or 0.61%, to 1,232.04, and the Nasdaq composite index rose 18.89, or 0.85%, to 2,228.70.