US STOCKS-Wall St climbs with Fannie and oil; Disney up late

NEW YORK, May 6 (Reuters) - U.S. stocks rose on Tuesday as Fannie Mae's reassuring comments about the credit and housing markets buoyed financial shares, while record crude oil prices lifted shares of energy companies.

Speculation that Microsoft Corp could resume takeover talks with Yahoo Inc fed a rebound in technology shares. Yahoo gained 5.5 percent, while Microsoft rose 2.1 percent, leading the S&P 500's advance.

After an early retreat, the session turned positive when top executives of Fannie Mae, the largest U.S. home finance company, said the worst of the credit market turmoil erupting from the real estate slowdown may have passed. That mitigated earlier concern about its huge quarterly loss, and propelled a broad rally in financial stocks.

Fannie Mae climbed almost 9 percent, and smaller rival Freddie Mac gained 7.1 percent.

Oil struck above $122 a barrel for the first time, carrying energy shares higher with it and outweighing a retreat in sectors sensitive to high fuel costs, such as airlines and retailers.

"When I came to work today, we thought Fannie Mae's stock will be trading south of $25, but somehow the investing public got news that they had a pretty positive conference call," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore, Maryland.

"There's a lot of people that are eyeing the financials right now, so if you're going to play the financials, Fannie Mae and Freddie Mac have to be among them."

The Dow Jones industrial average finished up 51.29 points, or 0.40 percent, at 13,020.83. The Standard & Poor's 500 Index ended up 10.77 points, or 0.77 percent, at 1,418.26. The Nasdaq Composite Index closed up 19.19 points, or 0.78 percent, at 2,483.31.

Immediately after the closing bell, there was more encouraging news that could help stocks extend their advance. Walt Disney Co posted a stronger-than-expected quarterly profit, sending its shares up more than 3 percent in after-hours trade from their close at $33.73 on the New York Stock Exchange.

Disney, one of the world's largest media companies and owner of the ABC television network, ESPN all-sports cable TV network and Disney theme parks in Florida and southern California, is seen as a bellwether of consumer spending.

Cisco Systems Inc's shares jumped more than 2 percent after the bell from their Nasdaq close of $26.33 as the network equipment maker also posted a profit that topped estimates.

In the regular session, Fannie Mae shares finished at $30.81, while Freddie Mac shares closed at $27.33. Other financial standouts were insurer American International Group Inc , which rose 2.1 percent to $48.40, and JPMorgan Chase & Co , the No. 3 U.S. bank, whose stock added 0.4 percent to $48.20.

The optimism from Fannie Mae's comments also contributed to a rise in the shares of home builders, with the Dow Jones home construction index up 2 percent for the day.

Shares of D.R. Horton Inc , the largest U.S. home builder, jumped 5.5 percent to $16.85 even as the company posted a quarterly loss of $1.3 billion and halved its dividend. For details, see [ID:nN06454667]

Energy shares rose after U.S. crude oil hit a record above $122 a barrel. A stronger-than-expected profit from independent oil and gas company Anadarko Petroleum Corp also buoyed the energy sector.

Exxon Mobil shares rose 0.6 percent to $90.07, while ConocoPhillips climbed 1.8 percent to $88.74 and Chevron Corp's shares gained 1.3 percent to $96.87, while Anadarko shares climbed 9.4 percent to $74.53.

Shares of oil services company Schlumberger Ltd jumped 2 percent to $103.58. The oil index shot up 3.3 percent.

Investment bank Goldman Sachs said in a research note that the price of oil could shoot up to $200 a barrel within the next two years as part of a "super-spike" driven by poor growth in oil supplies.

"Energy prices are going to stay high until -- a) we get some production on line, which there's none that I know of -- or b) until we have a serious recession," said Sasha Kostadinov, portfolio manager at Shaker Investments in Cleveland, Ohio.

Microsoft Corp and Yahoo Inc were both among the Nasdaq's top five advancers as speculation continued that pressure from Yahoo's shareholders would revive takeover talks. Shares of Microsoft, which abandoned its bid for Yahoo at the weekend, ended at $29.70, while Yahoo closed at $25.72.

But higher energy costs threatened to crimp consumer spending. Wal-Mart Stores Inc , the world's biggest retailer, was the top drag on the Dow. Wal-Mart's stock fell1.1 percent to $56.35.

On the New York Mercantile Exchange, June crude settled at $121.84 a barrel, up $1.87, or a gain of 1.56 percent for the session. Earlier, NYMEX June crude climbed as high as a record $122.73 a barrel, which eclipsed Monday's intraday record of $120.36.

Compared with a year ago, U.S. crude oil futures prices are up $59.91 a barrel -- or almost 97 percent.

Volume on the New York Stock Exchange was modest, with about 1.23 billion shares changing hands, below last year's estimated daily average of 1.90 billion. On the Nasdaq, about 2.21 billion shares traded, above last year's daily average of 2.17 billion.

Advancers outnumbered decliners on the NYSE by a ratio of almost 2 to 1, while on the Nasdaq, about three stocks rose for every two that fell. (Editing by Jan Paschal)

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