Energy Shares Lift S& P; Dow Takes Hit From GM's Losses
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The Standard & Poor's 500-stock index rose after oil posted its first weekly gain in a month, lifting energy shares, and as investors speculated that the worst of the subprime crisis had passed.
The benchmark index for U.S. equities slipped slightly on Friday after General Motors, the biggest U.S. automaker, reported a $15.5 billion loss. GM's results helped send the Dow Jones industrial average lower for a second week.
The S&P 500 gained 0.2 percent, to 1260.31 last week, led by MBIA after analysts said bond guarantors may cancel insurance contracts in exchange for cash payments. The Dow slipped 0.4 percent, to 11,326.32. The yield on 10-year Treasurys fell to 3.94 percent from 4.1 percent.
Financial stocks rallied 4 percent -- the most among 10 S&P 500 groups -- after the Federal Reserve extended an emergency lending program and the Securities and Exchange Commission prolonged a ban on a type of short sale. Banks, brokerages and insurance companies have rebounded 25 percent since July 15.
"There are some investors that think that the bottom has been put in on financials," said Walter "Bucky" Hellwig at Morgan Asset Management. "Long-term investors probably still like energy. The tight supply-demand situation is going to be around for awhile."
Second-quarter earnings slumped 20 percent on average for the 352 S&P 500 companies that have reported results, based on Bloomberg data. Still, only two industry groups show decreasing average earnings. Profits have fallen 82 percent at S&P 500 financial firms and 5.4 percent at companies that sell consumer goods, Bloomberg data show.
Washington Mutual shares had their steepest gain ever after Toscafund Asset Management raised its stake in the largest U.S. savings and loan bank, to become the second-biggest shareholder. MBIA, Wachovia and MGIC Investment also led the S&P 500's increase for the week.
Cisco Systems, Procter & Gamble and Time Warner are among the S&P 500 companies scheduled to release quarterly results next week.
The Treasury will auction $24 billion of three-month bills and $23 billion of six-month bills tomorrow. They yielded 1.68 percent and 1.9 percent, respectively, in when-issued trading. The Treasury will sell one-month bills on Tuesday.
-- Bloomberg News
