Indexes end higher on retailers, financials

Big advancers included investment banks Goldman Sachs (NYSE: - ) and Bear Stearns (NYSE: - ), which investors believe are poised to benefit from the recovery in global markets, and retailers Target Corp. (NYSE: - ) and J.C. Penney (NYSE: - ) after reporting February sales that beat expectations.

Indexes fell from their highs as market rumors that subprime mortgage lender New Century Financial Corp. (NYSE: - ) may file for bankruptcy revived some of the risk aversion that sent global equities tumbling last week. After the closing bell, New Century said it received $265 million in financing to satisfy some of the company's existing obligations.

U.S. stocks started the session sharply higher on the heels of big gains in Asian and European benchmark share indexes. Volatility has picked up in equity markets ever since a steep drop in China's stock market on February 27 triggered a worldwide stock sell-off.

"The pullback has given an opportunity to nibble on some bargains," said Fred Dickson, market strategist and director of retail research at D.A. Davidson & Co., who works in Lake Oswego, Oregon. "Investors are feeling comfortable that the markets are settling down. Enough retailers showed some good results and that lifted spirits."

The Dow Jones industrial average (DJI: - ) rose 68.25 points, or 0.56 percent, to end at 12,260.70. The Standard & Poor's 500 Index ( - ) advanced 9.92 points, or 0.71 percent, to close at 1,401.89. The Nasdaq Composite Index (Nasdaq: - ) gained 13.09 points, or 0.55 percent, to finish at 2,387.73.

THE WORST MAY BE OVER

New Century shares lost a quarter of their value, plunging 25 percent, or $1.29, to $3.87 on the New York Stock Exchange. After the closing bell, the stock fell an additional 2.6 percent to $3.77 in electronic composite trading.

"The majority of the damage in U.S. stocks has likely already been done," said Tim Biggam, options strategist at options brokerage firm Man Securities in Chicago. "Initially the rumor of a potential bankruptcy on subprime mortgage lender New Century fueled a drop in the S&P futures and cash by nearly 10 points. But that drop was met almost immediately with buying taking the market back toward the highs of the day."

In the banking sector, Bear Stearns shares rose 1.8 percent, or $2.69, to $152.06 on the NYSE. Goldman Sachs (NYSE: - ) rose 2.2 percent, or $4.35, to $199.94.

Among the winners in the retail sector, Target climbed 1.8 percent, or $1.09, to $61.69 and J.C. Penney shares rose 4.1 percent to $80.86, both on the NYSE. Department store operator Bon-Ton Stores Inc. (NasdaqGS: - ) shares shot up 15.8 percent, or $7.56, to $55.36 on the Nasdaq.

Steel maker Nucor Corp. (NYSE: - ) jumped 5.3 percent, or $3.17, to $63.12 on a strong forecast and helped other stocks in the sector. U.S. Steel Corp. (NYSE: - ) gained 3.2 percent, or $2.81, to $90.51.

Phone company AT&T (NYSE: - ) was the top-weighted gainer in the Dow and the S&P 500 following a European bond issue and an upgrade by A.G. Edwards.

AT&T shares climbed 3.1 percent, or $1.08, to end at $36.51 on the NYSE.

Trading was moderate on the NYSE, with about 1.66 billion shares changing hands, below last year's estimated daily average of 1.84 billion, while on Nasdaq, about 2.01 billion shares traded, just slightly below last year's daily average of 2.02 billion.

Advancing stocks outnumbered declining ones by a ratio of

more than 3 to 1 on the NYSE and by 3 to 2 on Nasdaq.

(Additional reporting by Doris Frankel)