Renewed Bailout Hopes Push Stocks Up
Saturday, December 13, 2008
Wall Street limped to the end of a volatile week of trading yesterday, finishing with modest gains after the White House moved to keep Detroit's Big Three automakers from collapsing.
The Dow Jones industrial average initially fell nearly 200 points yesterday after the Senate failed to pass a $14 billion emergency loan package for troubled automakers late Thursday. But stocks soon rebounded after the White House and Treasury Department said they would consider other options for bailing out the sector.
The Dow gained 0.8 percent, or 64.59 points, to 8629.68, while the Standard & Poor's 500-stock index was up 0.7 percent, or 6.14 points, to 879.73. Both gauges were flat for the week. But the tech-heavy Nasdaq composite index climbed 2.2 percent, or 32.84 points, to 1540.72, helping it end the week up 2.1 percent. It was buoyed by big-cap names such as Intel, which was up 5.3 percent yesterday to $14.75 a share.
The Senate's failure to pass the legislation sent Asian markets sharply lower before Wall Street opened. Japan's Nikkei average fell 5.6 percent. European markets followed suit, plummeting in early trading before regaining some ground. London's FTSE 100 closed down 2.5 percent, while the DAX index in Germany fell 2.2 percent
The subdued close to the week on Wall Street bolstered some investors' optimism that stocks will not return to the lows seen in October and are entering a more stable period, analysts said. "We have been bumping into bad news and the stock market has responded pretty well," said Jack A. Ablin, chief investment officer at Harris Private Bank in Chicago.
But demand for government bonds remains historically high, an indication that some investors remain nervous and are seeking shelter from market turbulence.
GM, considered the weakest of the automakers, had the deepest losses on the Dow yesterday, falling 4.4 percent to $3.94 a share. Ford rebounded from a more than 20 percent loss early to close up 4.8 percent at $3.04 a share. Chrysler is privately held.
In economic news, retail sales fell 1.8 percent last month, according to Commerce Department data, which was modestly better than expected.
The producer price index fell 2.2 percent last month, according to the Labor Department, a bigger drop than expected.
The dollar fell to a 13-year low against the yen yesterday before regaining ground, and crude oil fell 3.5 percent to $46.28 a barrel on the New York Mercantile Exchange.