U.S. Stocks Higher On White House Help For Car Makers
NEW YORK (MarketWatch) -- U.S. stocks moved higher on Friday, with energy shares fronting the gains, after the White House said it would loan the ailing auto industry $17.4 billion to prevent a "disorderly liquidation."
"Allowing the U.S. auto industry to collapse is not a responsible course of action," said President Bush in a nationally televised address Friday morning, when he unveiled the White House's plan to bail out the troubled Detroit industry. .
"The market's up on the rescue plan for the auto industry and I think this certainly is positive in terms of psychology. Of course there is still a lot of work that has to be done, but it is a relief," said Peter Cardillo, chief market strategist at Avalon Partners.
But likely curbing any sharp moves higher is the expirations of options today, Cardillo said. "There's a tendency where traders can hold back certain stocks in indices, so they don't have to run to cover or vice versa. It's a technical issue."
Speaking in New York Thursday night, Treasury Secretary Henry Paulson said he felt a rescue of the ailing car industry should not have been left to the White House. "I did not want to be making this argument -- I felt something should be done by Congress," Paulson said.
Yet in light of the fragile state of the economy, "it would seem to be an imprudent risk" to allow the industry to collapse, he said. .
The Dow Jones Industrial Average climbed 43 points to 8,645, with 21 of its 30 components trading higher.
General Motors Corp. led the blue-chip gains, up 11%.
Off the Dow, shares of Ford Motor Co. fell 1%.
Citigroup Inc. proved the Dow's biggest laggard, its shares off more than 5%.
The S&P 500 advanced 12.21 points to 897.49, with energy, information technology and utilities pacing the gains that stretched to include all 10 of the index's industry groups.
Standouts included Southwestern Energy Co. , up 12%.
The Nasdaq Composite rose 22.43 points, or 1.5%, to 1,574.
Volume on the New York Stock Exchange topped 1 billion, with advancing issues running ahead of those declining more than 3 to 1. On the Nasdaq, nearly 599 million shares traded hands, and advancers topped decliners more than 2 to 1.
February crude-oil futures rose Friday to above $42 a barrel while the front-month January contract fell, under pressure with the contract expiring at the end of the session.
"One of the reasons why oil has been pressured over the past couple of days is the fact you have their options expiring as well. Hedge funds don't want to carry on books next year," said Cardillo.
The banking sector was also expected to be in focus after Standard & Poor's cut its credit rating or outlook on 12 major international firms.
U.S. firms that were downgraded or had a banking division downgraded include Bank of America , Citigroup , Goldman Sachs , J.P. Morgan , Morgan Stanley and Wells Fargo .
Shares of Weyerhaeuser Co. fell 5.5% after the paper and building products giant cut its quarterly dividend and costs in response to a slowdown in business.
Late Thursday Oracle Corp. issued a brighter forecast than Wall Street expected, saying it would make a profit of 31 cents to 33 cents a share excluding one-off items in its fiscal third quarter.
Also late Thursday, Research In Motion reported a 7% rise in fiscal third-quarter earnings and surprised investors with a better-than-expected forecast for the current quarter due to strong demand for new BlackBerry devices.
In international markets Japan's Nikkei 225 fell 0.9% and the U.K.'s FTSE 100 index lost 2.4%.
U.S. stocks ended lower Thursday, with energy-related shares pacing losses after the price of crude oil fell to a four-year low. The Dow Jones Industrial Average lost 219.35 points, the S&P 500 Index fell 19.08 points and the Nasdaq Composite Index gave up 26.94 points.
By Kate Gibson