1:30 PM New York – U.S. stocks advanced on a deal between chemical companies. Fannie and Freddie Mac drop on lack of capital adequacy.

Dow Jones Industrial Average gained 38.51 or 0.35% to 11,185.95 and S&P 500 gained 4.33 or 0.35% to 1,249.02.

Fannie Mae stock dropped $1.80 to $13.52, the lowest level since 1992 and Freddie Mac stock dropped to $2.24 to $8.03 last seen in 1990. Former St Louise Fed President in an interview said that Fannie and Freddie “are insolvent” and blamed Congress for letting the two government chartered agencies to borrow beyond their abilities to repay. His comments roiled financial stocks and dragged Fannie and Freddie Mac to two-decade lows.

Lehman dropped $1.69 to $18.06, Wachovia Corporation declined 78 cents to $13.50, Bank of America increased 26 cents to $22.32 and Citigroup rose 14 cents to $16.60.

Dow Gainers and Losers

Of the 30 stocks in Dow Jones Industrial Average 14 stocks gained and 16 declined.

General Motors led the decliners in the Dow Jones Industrial Average with a loss of 3.68% or $0.38, to $9.95 followed by losses in AIG of 2.18% or $0.57, to $25.57, in Coca-Cola of 1.53% or $0.78, to $50.11, in Home Depot Inc of 0.98% or $0.22, to $22.15 and in Wal-Mart Stores of 0.97% or $0.56, to $57.11.

Alcoa Inc led the gainers in the Dow Jones Industrial Average index with a rise of 4.60% or $1.45, to $32.99 followed by increases in AT&T of 1.65% or $0.53, to $32.65, in Du Pont of 1.37% or $0.56, to $41.48, in General Electric of 1.18% or $0.32 to $27.51 and in Pfizer Inc of 1.11% or $0.20 to $18.23.

Stock Movers

Bank of America Corp (BAC) in the last one year traded as high as $52.71 in October 2007 and as low as $21.53 in July 2008. Based on the yesterday’s closing price the company has a market cap of $98.23 billion.

Cooper Industries Ltd (CBE) in the last one year traded as high as $58.63 in July 2007 and as low as $37.11 in July 2008. Based on the yesterday’s closing price the company has a market cap of $7.67 billion.

Energy Transfer Partners (ETP) in the last one year traded as high as $64.00 in July 2007 and as low as $42.25 in July 2008. Based on the yesterday’s closing price the company has a market cap of $6.12 million.

FCStone Group Inc (FCSX) in the last one year traded as high as $52.40 in January 2008 and as low as $21.44 in March 2008. Based on the yesterday’s closing price the company has a market cap of $831 billion.

S&P Movers

Of the stocks in S&P 500 index, 216 increased 8 declined and 8 remained unchanged.

Freddie Mac led the decliners in the S&P 500 index with a loss of 21.05% or $2.16, to $8.10 followed by in losses in Fannie Mae of 15.02% or $2.30, to $13.01, in MGIC Invt Corp of 9.62% or $0.64, to $6.01, in SRM Corp of 7.65% or $1.25, to $15.08 and in Intercontinental of 7.40% or $7.06, to $88.33.

Rohm & Haas Co led the gainers in the S&P 500 index with a rise of 65.60% or $29.41, to $74.24 followed by increases in Cooper Industries of 5.62% or $2.12, to $39.81, in Alcoa Inc of 4.39% or $1.38, to $32.92, in Tyson Foods of 4.15% or $0.62 to $15.56. Hercules Inc of 4.07% or $0.66 to $16.88.