NEW YORK — Wall Street finished sharply higher Tuesday as oil prices dropped for the second straight day, and investors were encouraged by the possibility of more help for the ailing financial system. The Dow Jones industrials gained more than 150 points, and all the major indexes were up more than 1 percent.
Crude prices tumbled $5.33 to settle at $136.04 a barrel on the New York Mercantile Exchange, bringing oil’s two-day drop to more than $9. Other commodities also pulled back.
Speeches by Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and JPMorgan Chase & Co. chief executive Jamie Dimon gave the market some reassurance about the financial sector. Investors have been concerned this week about the health of government-backed lenders Fannie Mae and Freddie Mac; the two companies’ troubles helped send prices lower Monday, but they also helped lead the rebound Tuesday.
The market was relieved to hear Bernanke say in a speech that the central bank might extend its lending efforts to investment banks; the Fed began allowing the big companies to borrow after the near- collapse of Bear Stearns Cos. earlier this year.
At the Federal Deposit Insurance Corp.’s forum on mortgage lending, where Bernanke spoke, Dimon said “the future is very, very bright,” but “I do think we have some very serious issues to face.”
Paulson, meanwhile, made an upbeat assessment of the government’s efforts to prevent the volume of mortgage foreclosures that touched off the credit crisis last year, although he also said he expects foreclosures to continue.
The Dow rose 152.25, or 1.36 percent, to 11,384.21, after moving in and out of positive territory. It was the biggest gain for the blue chips since June 13.
The advance left the Dow down 19.6 percent from its October high — just shy of the 20 percent threshold that signals a bear market.
Broader stock indicators rose as well. The S&P 500 rose 21.39, or 1.71 percent, to 1,273.70, while the Nasdaq composite index rose 51.12, or 2.28 percent, to 2,294.44.
“There was just a little light today that things might be better, a real relief bounce,” said Ryan Larson, senior equity trader at Voyageur Asset Management. “Things have been beaten up so bad the past couple of weeks that investors are finding a little bit of value down here.”
